Must I file for bankruptcy before foreclosure proceedings begin to protect my home?

UPDATED: May 2, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: May 2, 2012Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Must I file for bankruptcy before foreclosure proceedings begin to protect my home?

The company that bought our second mortgage that we had defaulted on is threatening foreclosure. We have tried unsuccessfully to negotiate with them. Unfortunately, it seems bankruptcy may be the only way to keep our home. Reduced household income and injuries have prevented us from making payments. We have already defaulted on other accounts and another loan. There is nothing left to cut. Can we wait for foreclosure proceedings to begin and then declare bankruptcy or must we declare first to prevent foreclosure? It may be futile but we are hoping to avoid bankruptcy.

Asked on May 2, 2012 under Bankruptcy Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You can file bankruptcy after foreclosure proceedings begin, and once you file, all collections efforts and legal attempts to recover payment from you, including foreclosure, will be temporarily stopped or stayed. Two things to bear in mind:

First, if you cut the timing too close and the foreclosure is actually accomplished before the bankruptcy is formally filed, you will lose the home. Bankruptcy will stop a pending or in-process foreclosure, but will not "undo" a foreclosure that has already happened.

Second, while bankruptcy will temporarily halt foreclosure, it will NOT prevent it indefinitely: at some point, if you cannot or will not pay what you owe on the home, the bank will be able to foreclosure. Filing bankruptcy is not a permanent solution to the threat of losing your home. When a debt is secured by property, like a mortgage is secured by a home, the lender has the right to take the property if the debt is not paid; what bankruptcy will do is prevent you from then (if the home is underwater on the loan) being sued by the bank for additional amounts (a "deficiency judgment").

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption