When you file a bankruptcy case you get what’s called the “Automatic Stay”, or automatic protection that halts creditors from taking action against you or any of your property (note that the automatic stay does not go into effect in some instances where there are multiple bankruptcy case filing within a certain period of time).
So while you may be able to stop a foreclosure dead in its tracks, whether or not you can save your house, rather than just delaying the foreclosure process, depends on a number of things. At any rate, the bankruptcy case must be filed before the foreclosure date, and the creditor noticed, in order to stop the foreclosure.
If there’s a foreclosure date and you’re filing a chapter 7, really all the chapter 7 can do is stop the foreclosure process temporarily. If you want to save the house, you will independently have to come to an agreement with the creditor, or pay back your mortgage arrears before you lose the protection of the Automatic Stay.
If there’s a foreclosure date and you file a Chapter 13 bankruptcy, your arrears are usually put into a chapter 13 plan, and paid off within a period of time, thereby saving the home.
By, Casey Yontz – Bankruptcy attorney in Mesa, Phoenix and Tempe Arizona