The fastest way to stop foreclosure and avoid losing your home is an automatic stay provided by filing for bankruptcy. When you file for bankruptcy, the bankruptcy court issues what is called an automatic stay. This stops all creditors from any action to collect your claim, including foreclosure.
What can prevent an automatic suspension:
- Mortgage’s trial: The automatic stay will stop foreclosure proceedings in the short term. However, in the long run, Chapter 13 is your best option to allow you to keep your house bankrupt. Chapter 13 stops foreclosures.
- Eviction: The stay of foreclosure can temporarily stop the eviction process, unless your landlord has already obtained a judgment against you at the time of filing for bankruptcy. Otherwise, you can get a pardon for a few days or weeks before your landlord is likely to ask the court to lift the stay and allow the eviction to continue.
- Utility disconnections: You will have at least 20 days provided by the automatic suspension before your utilities can be disconnected due to non-payment.
- Creditors and collection agencies: With some exceptions, the automatic stay will immediately stop lawsuits and other actions brought against you by creditors, collection agencies, or government entities. This includes repossession, collection calls, and garnishment.
Exceptions to the automatic stay:
- Selective tax procedures: It can still be audited by the IRS, required to file a tax return and pay any subsequent tax assessments. However, the IRS cannot file a sixteen tax lien or your property or income under automatic stay.
- Legal and criminal proceedings: Claims related to support payments (child support, alimony, etc.) are not affected by the stay. Neither are criminal proceedings, although if there is a debt component that accompanies a charge, it is likely that only the criminal charge will follow through.
- “Raising” the Stay: Creditors are likely to ask the bankruptcy court to “lift” the stay in certain situations. If the request is reasonable, the court will likely grant permission for the actions against you to proceed.
The automatic stay remains in effect until a judge lifts the stay (see above) for one or all creditors, a discharge is granted to the debtor and the suspension becomes permanent, or the property is no longer in the debtor’s possession.
There are many components to the bankruptcy process, and it is best to take the first steps to avoid foreclosure and other actions by your creditors against you.
