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Can I file bankruptcy with a pending foreclosure?

If you’re behind on your mortgage payments, you may have already been served a notice of default, or you are in an active foreclosure, a bankruptcy may be of great help.  Bankruptcy with a pending foreclosure?

Filing for bankruptcy in Utah or any other state for that matter can provide temporary relief from foreclosure proceedings. The moment you file a bankruptcy case under Chapter 7 or Chapter 13 something called the Automatic Stay goes into effect.  This stay is a powerful tool that can help you keep your home.  The stay stops all collection actions against you, including foreclosure proceedings. However, creditors can file a motion to lift the stay, which allows them to go ahead. The court is likely to grant this type of motion if it looks like you ultimately won’t be able to keep your home.  If you get to keep your home long term depends on a number of factors, including what type of bankruptcy you file.

Chapter 13 Bankruptcy and your home:

Most of the time, a Chapter 13 bankruptcy can be a good choice if you want to keep your home but have fallen behind on your house payments.  For example in Chapter 13, you can roll your missed mortgage payments into a repayment plan. The good part of this option is that you can pay them off a little bit of the amount you are behind over several years, rather than having to come up with the whole amount in a lump sum payment.   As long as you complete your Chapter 13 bankruptcy plan and stay current on your monthly mortgage payments going forward, you can keep your home.

Chapter 7 Bankruptcy and your home:

In Chapter 7 bankruptcy a bankruptcy trustee can take any property you own that isn’t protected by an exemption (Please click here to learn about Utah homestead exemptions). As long as you can use the Utah state exemptions, however, your home won’t be at risk: Provided that you are current on your mortgage payments at the time you filed the bankruptcy ad stay current on your mortgage payments during the bankruptcy case.  It is of note that if you are facing a home foreclosure filing bankruptcy will wipe out your personal liability to repay the debt. However, the lender still has the right to take back the house because they are secured to the property via a deed.  Under a Chapter 7 bankruptcy case you usually can help postpone foreclosure for at least a few months. However  Chapter 7 bankruptcy does not give you any way to get back on track with the lender through a repayment program through the bankruptcy system. You may be able to pay back what you owe or negotiate an agreement with the lender if you want to stay in your house.

We suggest that you work with an experienced Utah bankruptcy lawyer  on doing a bankruptcy with a pending foreclosure. One that has helped hundreds of clients deal with the foreclosure process.  Give us a call we can help.  801-221-2211. #utahbkguy

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