Bankruptcy has a lot of specific terminology and processes. If you’re in bankruptcy or are considering filing for bankruptcy, it’s important to familiarize yourself with the process and what it means.
At Denbeaux & Denbeaux, we encourage you to explore all of your options before filing for bankruptcy if it’s your last resort, especially when it comes to bankruptcy to avoid foreclosure. Filing for bankruptcy can be a long and complicated process, but if you choose to file for bankruptcy, it’s important that you understand how it works.
Bankruptcy isn’t the best solution for all financial situations, especially if you’re facing foreclosure or excessive repayments of predatory loans. Contact Denbeaux Law to learn more about alternatives to bankruptcy if you have a home or are suffering from predatory lending.
What Is An Automatic Stay?
The automatic stay is intended to stop creditors from contacting you and stop them from trying to collect on a debt, stop garnishment of wages, stop foreclosure, and stop creditors from trying to repossess the property while you’re in bankruptcy.
When someone files for bankruptcy, an estate is automatically created and put under an automatic stay. A bankruptcy estate includes all of the property that you have debt on. A house with a mortgage and cars with loans would be included in the bankruptcy estate.
An automatic stay is put in place as soon as you file for bankruptcy. Your estate typically remains under an automatic stay until your debts are discharged at the end of your bankruptcy.
At the end of your bankruptcy, the automatic stay is removed with a discharge injunction. A discharge injunction means that your debts have been discharged and stops collectors from trying to collect on debts that have been properly discharged during bankruptcy.
Does an Automatic Stay Stop Foreclosure?
An automatic stay can be used as a method to stop foreclosure. If you have a mortgage on your home and declare bankruptcy, your home would be included in your bankruptcy estate, which means that any foreclosure proceedings would have to stop regardless of where you are in the foreclosure process.
Alternatives to an Automatic Stay
An automatic stay can stop foreclosure, but it’s not always the best option. Filing for bankruptcy to get an automatic stay and avoid foreclosure can create a lot of other issues for you and any other debts you may have.
There are other alternatives to filing for bankruptcy and getting an automatic stay that can help you avoid foreclosure that might be a better option for you to explore before filing for bankruptcy.
Loan modifications can be a great option to avoid foreclosure. With a loan modification, you’ll work with your lender to modify your mortgage terms to help make your mortgage payments more affordable. This can be a great solution because it allows you to work with your lender to help you avoid foreclosure.
A mortgage refinance can help you avoid foreclosure. If you choose to pursue a mortgage refinance, you’ll pay off your current mortgage with a new mortgage. When refinancing, you can shop around with different lenders to find the best mortgage terms for you.
Depending on your lender’s rules, a mortgage forbearance could be a good option to help you avoid a foreclosure. A mortgage forbearance provides short-term relief by reducing or suspending mortgage payments for a set period of time.
Short sales can help you avoid foreclosure by selling your home before foreclosure and paying off your mortgage. When you enter into a short sale, you have to follow specific guidelines set out by your lender, and you will lose your home, but you avoid going through foreclosure.
If you are facing foreclosure, there are a lot of options available that can help you avoid foreclosure. A foreclosure attorney can help walk you through all of your options to avoid foreclosure and help you decide what’s the best options for your situation.
Contact a Bankruptcy Attorney
Bankruptcy is a nuanced process with a lot of specific steps and procedures. It’s important to understand how all of the steps involved in bankruptcy work and how they can impact you.
An attorney can work with you to help you understand the bankruptcy process and what it might look like as you go through the process. A bankruptcy attorney can help prepare you for the bankruptcy step and work with any lenders if necessary.
Joshua Denbeaux is an experienced and trusted New Jersey bankruptcy attorney. Contact us today to learn more about how we might be able to help you.
