Can Foreclosure Be Stalled By Filing Chapter 7 Bankruptcy?

chapter 7 bankruptcy


By:Mike Cibik

Should you file a Chapter 7 bankruptcy if you want to stall a foreclosure?    Filing for Chapter 7 bankruptcy can stall a foreclosure and it may give someone additional time for someone to stay in their home  but there is no way to say how long.   So the long answer would be to say is that it may or may not.  . . and the short answer is “yes” it can, but it might not (for long).

Additionally, you might wish it hadn’t.

Losing a home and moving can be traumatic and bankruptcy might help make the process easier.  It may be accomplished by Chapter 7, though 7 is not designed to stop foreclosure permanently.  Chapter 13 usually does a better job to stop the foreclosure and it allows time for the homeowner to catch up missed payments, reduce other debts, and might even buy time until a mortgage is modified.

Yes, filing a Chapter 7 bankruptcy can temporarily stop the process but how temporary depends on the creditor and how fast they move. If a temporary delay can help then this might be the right choice for some and it may surprise many to learn how long some mortgage lenders take to enforce the foreclosure rights.  Many do nothing for a long time, even if they were hot on the trail of the borrowers right up until the case was filed.

Even some of the creditors who quickly file a Motion for Relief from Stay to get the property out of the bankruptcy may move as slow as a snail on the state foreclosure.   Once they get the stay lifted, it is  completely up to them whether to resume the state foreclosure action again, and when.

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few attorneys in the Philadelphia area certified by the American Bankruptcy Board.


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