Bankruptcy Article


Will bankruptcy save my home from foreclosure?

WILL BANKRUPTCY SAVE MY HOME FROM FORECLOSURE?

What will bankruptcy do?

When bankruptcy is filed it provides an automatic stay in foreclosure proceedings.  This means that a trustee sale cannot be held so long as the bankruptcy is filed before the trustee sale starts.

Do I automatically get to keep my home if I file bankruptcy?

No.  Bankruptcy does not allow the homeowner/borrower to keep their home while also ending their obligation to pay the home loan.  Bankruptcy may be tool to provide temporary or long term assistance to the borrower but it’s a strategy that should be pursued after consulting with an attorney.

How can bankruptcy help?

There are a couple of ways a bankruptcy might help, and may be recommended by your attorney. 

The effect of filing a bankruptcy grants an automatic stay in debt collection efforts including foreclosures.  An automatic stay basically means all collection, repossession, and foreclosure efforts are put on hold until the bankruptcy process is complete.  This period may allow your attorney to work through your foreclosure case more thoroughly or give her or him time to work something out with the lender. 

Another way a bankruptcy might be helpful is that it may allow certain debts to be discharged, meaning your obligation to pay ends, or it may reorganize your debts into a more manageable payment.  This may help by freeing up money so that you can more easily make your monthly payments.

Is there a downside to declaring bankruptcy?

Bankruptcy may negatively impact your credit score however at the point most people are considering bankruptcy, their credit scores have already taken a hit.  There may be other cons to pursuing the path of a bankruptcy but they will depend on other factors that your attorney will discuss with you.  Remember no one case is the exactly the same as another. 

Bankruptcy is often made more difficult when mistakes are made in the process.  Often people will file before meeting with an attorney and overlook important facts or issues in their case.  Other common mistakes occur when individuals, in anticipation of filing bankruptcy, make additional purchases or attempt to pay off certain debts to maintain relationships with whoever lent them the money.   This should be avoided until consulting with an attorney because certain purchase may make the bankruptcy look fraudulent, and payments made can be undone through the bankruptcy process - adversely affecting both the borrower and the person or business that lent the money.  Meeting with an attorney, even if it’s just for a brief consult could prove instrumental in making the process smoother, less stressful, and help avoid these and other pitfalls. 

Where can I get more information about bankruptcy?

The US Bankruptcy Court of Arizona has vast amounts of information online as well as a help center and hotline to answer questions.  The hotline number is 866-553-0893.  However, individuals should also contact legal aid, especially if they are also dealing with foreclosure related issues or at risk of foreclosure.  To apply for legal assistance use the Access To Justice Online Intake System.

Where can I find legal help with a foreclosure?

Individuals faced with loss of a home through foreclosure/trustee sale or dealing with issues related to a foreclosure can apply for free and reduced fee legal services through the Access to Justice Online Intake System, the link is also available on the top right of AZLawHelp under the “LegalLEARN” section. Individuals may also contact legal aid directly, however due to high call volume there may be long wait times on the phone and the phone system may disconnect calls when overwhelmed. To find the legal aid agency serving a particular county in Arizona, select the desired county in the drop-down under the section titled “FIND FREE LEGAL HELP” on the right column of AZLawHelp.


Comments:

QUESTIONS

  • I filed bankruptcy in 2003. What's the time limit on filing another one? The debts are not frivilous.
  • Is there a free service for assistance in filing for bankruptcy due to credit card debt?
  • I have more than $10k outstanding debt (student, loan, credit card, hospital bills, etc.) that I am unable to pay on my income(11,760) gross annually. What would be my best move to eliminate the debt, and restore credit.
  • recently was given a Chapter 7 discharge, but Mortgage lender will not give me another loan modification because of income is not sufficient enough. I am behind in Mtg payments can I file a Chapter 13 to get caught up on delinquent mtg payments.
  • When filing bankruptcy do I need to include the leased land I have in South Dakota on the schedule?
  • I am a 23 year old mother of two living with my parents currently. Im in school. I have debts that I need paid off. And I simply cannot do it. I recieve government assistance as far as food and cash for the children go. Can you suggest some places that will help me file bankruptcy seeing how low income I am. I need help!!! Please and thank you.
  • Can I file without an attorney all I have is credit card debit. and where can I get the paperwork?
  • My debts, including my first and second mortgages were discharged in Ch. 7 bankruptcy in 2011. After BK, I contacted my landlord (BBVA Compass), to see if they would agree I stay in my house in exchange for reduced payments. They said OK, but said they couldn't provide me with any receipt or written communication of any kind. However, they are considering the second mortgage in the total owed, despite that debts like these are considered UNSECURED. Should I accept this agreement where I won't have a paper trail to rely on in case of a dispute later? Thanks!
  • What is the homestead exemption and how it protect home owners?
  • My wife and I have been married for just under a yesr. We have no joint credit. Can I file for bankruptcy along without it affecting her?

STORIES

LegalLEARN

FIND LEGAL HELP

  • Please select your county of residence below.

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OTHER LEGAL RESOURCES

  • State Bar of Arizona
    www.azbar.org
  • Maricopa County Bar
    www.maricopabar.org
    Referral number 602-257-4434
  • Pima County Bar
    www.pimacountybar.org
    Referral number 520-623-4625
  • National Domestic Violence Hotline
    800-799-7233
  • Bankruptcy Court Self Help Center
    866-553-0893
  • Certified Legal Document Preparer Program
    Link

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