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How can the Automatic Stay keep me in my home?

Many of my clients come to me when they are facing foreclosure or eviction and face the very real possibility of having nowhere to go and can no longer stay in their home.   Bankruptcy, used strategically, can help many of these clients to either stay in their homes permanently, or at least buy them some time to find a new place to go.

Clients facing foreclosure on their homes because of overdue mortgage payments can catch up on their payments in a Chapter 13 bankruptcy case.  Chapter 13 allows a debtor to pay past due mortgage payments over the course of up to 5 years.  However, the debtor will need to make those payments, in addition to some payment to unsecured creditors, and all of their normally due mortgage payments each month during the life of their Chapter 13 plan.  This is sometimes not possible given the economic realities of many debtors.  Nonetheless, a bankruptcy filing — regardless of the chapter — will stop the foreclosure or eviction process in its tracks, at least temporarily.

With every bankruptcy filing* comes the automatic stay.  The automatic stay acts as a temporary restraining order upon all creditors and forces all court action to take a “time out”.  Once a bankruptcy petition is filed, the stay goes into effect automatically (hence, “automatic stay”) and all collection activity must stop.  That means no further harassing phone calls from creditors, no new or continued lawsuits against the debtor, and foreclosure activity and eviction proceedings must similarly cease.

For some debtors a bankruptcy petition filing will allow the debtor enough time to find a qualified buyer for her house, and in doing so, allow the debtor to get herself out of financial trouble.  For these type clients a Chapter 13 case is the preferable type of bankruptcy as it allows the debtor to dismiss the case once the imminent threat of foreclosure is gone.

For others the debt situation is worse, and there is no equity in the home (or they rent their home), and so this sort of “strategic” chapter 13 case is of no real benefit.  In this instance, many clients are simply looking for time to find an alternative place to live.  In these instances a bankruptcy petition may pause the foreclosure or eviction process, buying all important time for a debtor to find a new place to live.  But beware, the pause will likely only be temporary, and in most instances a landlord who is not being paid his rent, or a mortgagee who is not getting payments on a secured debt will be granted relief from the automatic stay, and will eventually be able to continue the process of foreclosure and/or eviction.  For many of these clients — even if there is not a lot of other debt — a Chapter 7 case is preferable to clear a deficiency claim, and afford the debtor a fresh start.

A qualified bankruptcy attorney can help you to determine the specifics of how a bankruptcy might be able to help you stay in your home temporarily or even permanently.  Call the Law Offices of James Wingfield today at 508-797-0200 or use the contact form on our website to schedule a no-cost consultation.

*There are some exceptions, such as in the case of multiple filers whose cases have been dismissed.

One Response to How can the Automatic Stay keep me in my home?

The Law Offices of James Wingfield is proud to be a debt relief agency. We help the individuals, families and small businesses of the Worcester area file for bankruptcy relief under the United States Bankruptcy Code. The Law Offices of James Wingfield serves Central and Western Massachusetts clients in Worcester County, Hampden County, Hampshire County and Middlesex County including Worcester, Shrewsbury, Springfield, Westborough, Southborough, Framingham, Northampton, Natick, Amherst, Fitchburg, Leomister, Douglas, Uxbridge, Gardner, Belchertown, Holyoke, Wilbraham and Chicopee. The information contained and obtained in this website does not, nor is it intended to be, legal advice. Contacting us, be it through this website, via email of by telephone does not create an attorney-client relationship. An attorney-client relationship is only created upon execution of an engagement agreement or fee agreement.