If you are facing a foreclosure of your home, you may be simultaneously getting ready to file for bankruptcy. If this is the case, you should know that it does make a difference whether you file your bankruptcy petition before or after your home is foreclosed. Depending on the circumstances of your unique case, there may be benefits to filing for bankruptcy before the foreclosure sale occurs, but in others, it may be more to your advantage to let the foreclosure run its course and then file for bankruptcy later. In this blog, we’ll examine the benefits of filing for bankruptcy before foreclosure.
Filing for bankruptcy before foreclosure can provide the following benefits:
- Peace of mind. If you don’t want to keep your home, filing for bankruptcy before foreclosure means that you wont have to worry about a deficiency balance that may be leftover from the foreclosure process. The bankruptcy will eliminate that debt and you can walk away without owing anything.
- More time in your home. Filing for bankruptcy puts an automatic stay in place, halting a foreclosure case and giving you more time to live in your home.
- You are considering Chapter 13 bankruptcy. A Chapter 13 bankruptcy allows you to keep your property while you make repayments to creditors over a period of three to five years. This may allow you the opportunity to get current with your mortgage again, an option you would not have if you filed for bankruptcy after foreclosure.
- You want a loan modification. Filing for bankruptcy before a foreclosure places an automatic stay on the foreclosure, giving you time to seek a loan modification that will make your payments more manageable. Plus, when a bank sees that you have had debts discharged in a bankruptcy, they will be more likely to approve a modification.
Keep in mind, however, that there are several situations in which it may be better to wait and file for bankruptcy after foreclosure, and there may even be times in which a person will not have a choice. It is important to consider your entire financial situation when making this decision. It is wise to involve an attorney who can advise you on how best to proceed.
If you are facing foreclosure and have questions about timing your bankruptcy, the Baltimore bankruptcy attorneys at Belsky, Weinberg & Horowitz LLC can help. Call us today to schedule your free case evaluation: (410) 234-0100.