Bankruptcy can stop your foreclosure in certain circumstances. Of course, you will need to qualify for either Chapter 7 or Chapter 13 bankruptcy. However, if you qualify, you might be able to reap some huge benefits in delaying and/or preventing your foreclosure proceedings from moving forward.
The first benefit of filing for bankruptcy comes in the form of an Order for Relief issued by the bankruptcy court. The Order of Relief will allow you to receive an "automatic stay," which prevents your creditors from trying to collect on your unpaid debts that are covered under the bankruptcy. Then any scheduled foreclosure sale or other foreclosure actions will be canceled and postponed as a result of the automatic stay until the finalization of your bankruptcy.
It's important to note that your automatic stay will not be set in stone. The bank could file a motion to lift the automatic stay. If the court grants this motion, your plan to delay foreclosure through bankruptcy could fail. However, your filing for bankruptcy could still delay the foreclosure sale by approximately two or more months even if the stay gets lifted -- which could buy you some extra and very valuable time in your home.
There are other factors that homeowners facing foreclosure will want to think about before they move forward with a bankruptcy filing. In fact, many other non-bankruptcy solutions could exist to help a homeowner defend against foreclosure. Therefore, be sure to review and learn about any and all foreclosure prevention solutions available to you before you move forward with your plans.
Source: Findlaw, "Facing Foreclosure? How Bankruptcy Can Help," accessed Jan. 30, 2018