Thomas F. Miles, Attorney and Counselor at Law
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Can personal bankruptcy delay foreclosure proceedings?

When a California homeowner receives notice of foreclosure, a hasty reaction may cause more harm than good. Although there are different options available, a lack of information may lead to uninformed choices being made. The help of experienced legal counsel is available to explain the potential remedies, including personal bankruptcy protection.

Filing for bankruptcy may delay foreclosure on the home, but there is a lot to consider before taking such an important step. While a bankruptcy application comes with an automatic stay that is ordered by the court that includes a temporary hold on pending foreclosure proceedings, it is not a final order. Nevertheless, the stay may be long enough for the homeowner to catch up with mortgage payments. One exception is the lender's right to file a motion to lift the stay -- a right often exercised if the bankruptcy filing happens months after the foreclosure notice.

A means test will determine whether the homeowner can file for Chapter 7 or Chapter 13 bankruptcy, and the effects of each type on foreclosure are different. Under Chapter 7 -- typically called liquidation bankruptcy -- some assets may be sold at auction to cover debts. Chapter 13 bankruptcy allows the debtor to structure a repayment plan for the court' approval that will enable him or her to pay debts -- including a mortgage -- over a period of three to five years.

None of the decisions taken after receiving a notice of foreclosure should be taken lightly, and a consultation with an experienced California personal bankruptcy attorney may be the first step to take to achieve financial stability once again. The advice of a seasoned lawyer can be invaluable, and learning about the different options available may enable the homeowner to make informed choices. Other options with which an attorney can help may include exploring the possibility of a special forbearance with the mortgage holder, as well as the statutory right of redemption in some states after foreclosure sales.

Source: FindLaw, "Bankruptcy and Foreclosure: 5 Things to Know", Betty Wang, Accessed on Oct. 27, 2016

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