Federal law can stop foreclosure immediately. Title 11 of the United States Code, otherwise known as the “Bankruptcy Code,” provides that when a chapter 7 or chapter 13 bankruptcy petition is filed nearly all collection actions must stop. This immediate prohibition of ongoing collection actions is known as the “automatic stay” in bankruptcy. As applied to foreclosure, when your bankruptcy lawyer files your chapter 7 or chapter 13 bankruptcy petition in the Northern District of California, Santa Rosa Division, federal law will require the foreclosure process to stop.
The Automatic Stay
Section 362(a) of the Bankruptcy Code contains the provisions for the automatic stay. For homeowners facing foreclosure this Section obligates lenders to cease the foreclosure process upon filing of the homeowner’s bankruptcy petition. However, it is prudent to put the lender on notice of the homeowner’s bankruptcy filing right away. With notice the continuation of the foreclosure process could be viewed as a “willful” violation of the automatic stay subjecting the lender to damages.
The First Step
In order to stop foreclosure you will need to speak with a consumer bankruptcy attorney. Most Santa Rosa bankruptcy attorneys provide free consultations, so this action should’t cost you anything. During the consultation the attorney will determine whether you want to keep your house or just delay the foreclosure process. If you want to keep your home the attorney will probably advise you to file chapter 13 bankruptcy. In chapter 13 bankruptcy defaults on long-term debts can be cured. As that rule applies to homeowners in foreclosure, delinquent mortgage payments can be repaid over 3-5 years through a chapter 13 repayment plan. Once the repayment plan has been completed the homeowner will no longer be in default thereby preventing the lender from re-initiating the foreclosure process.
To learn more about your options for stopping foreclosure call our bankruptcy lawyer for a free consultation.