Can a house be foreclosed on if you are in bankruptcy?

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Can a house be foreclosed on if you are in bankruptcy?

We have declared bankruptcy due to loss of my husband’s job. We are current with the first mortgage, second mortgage is a home equity line of credit that is not current. They are threatening to foreclose on our home. Can they do this or are these just scare tactics?

Asked on December 28, 2011 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, they can foreclose.

The bankruptcy process "stays," or temporily halts, all collections efforts, including foreclosure (or repossession of a vehicle), so you will get some weeks or months (typically) of reprieve. However, when a debt is secured by property, as a mortgage is secured by the home, you cannot keep it indefinitely without either paying or working something out with the lender (which is voluntary on the lender's part). Ultimately, the bank will be able to foreclose on the home if you don't pay the mortgage, though at least the bank will not be able to pursue you for any remaining balance on the loan; "all" they can do is take the home if you file bankruptcy.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, they can foreclose.

The bankruptcy process "stays," or temporily halts, all collections efforts, including foreclosure (or repossession of a vehicle), so you will get some weeks or months (typically) of reprieve. However, when a debt is secured by property, as a mortgage is secured by the home, you cannot keep it indefinitely without either paying or working something out with the lender (which is voluntary on the lender's part). Ultimately, the bank will be able to foreclose on the home if you don't pay the mortgage, though at least the bank will not be able to pursue you for any remaining balance on the loan; "all" they can do is take the home if you file bankruptcy.


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