Does Bankruptcy Stop Foreclosure?


Bankruptcy stops foreclosures, at least temporarily. Depending on what chapter of bankruptcy you file, you may have to sell your home after you file for bankruptcy.

Automatic Stay

  • The second you file your petition for bankruptcy (no matter what chapter you file under) the law requires all of your creditors to immediately stop all debt collection efforts, including foreclosures. This legal rule is called the automatic stay.

Chapter 13

  • Chapter 13 bankruptcy is a legal way for you to reduce some debts, pay off other debts, and have more time to pay off your debts. If you file Chapter 13 then you will create a debt repayment plan that will include repaying your mortgage, which means you get to keep your home.

Chapter 7

  • Chapter 7 bankruptcy is more complicated than Chapter 13, at least when it comes to homes. Under Chapter 7, you may be able to keep your home, but most likely you will have to sell it.


  • A lender can file a request for an exception to the automatic stay. If you are behind on your mortgage payments, your lender will probably file such a request with the bankruptcy court. If the court approves the request, your lender can continue with the foreclosure proceedings.


  • The benefit of filing Chapter 7 bankruptcy is that it discharges all of your debts, meaning you no longer have a legal duty to pay those debts. This means that if you are unfortunate enough to lose your home to foreclosure, at least you will not be liable for a deficiency judgment if you owe more on your house than it is worth.


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