Mortgage, Foreclosure and Bankruptcy

Falling behind on mortgage payments can create significant financial pressure. If you are facing foreclosure or struggling to keep up with your home loan, bankruptcy may provide options for addressing certain debts and temporarily stopping some collection actions.

A bankruptcy attorney in Chicago can help you understand how Chapter 7 or Chapter 13 bankruptcy may affect your mortgage, foreclosure proceedings, and other financial obligations.

Can Bankruptcy Stop Foreclosure?

Filing for bankruptcy generally creates an automatic stay, which can temporarily stop many creditor collection activities. In some circumstances, this may temporarily pause a foreclosure proceeding.

The automatic stay does not necessarily eliminate mortgage debt or permanently prevent foreclosure. Its duration and effect depend on the circumstances of the bankruptcy case and whether an exception applies.

Chapter 7 and Foreclosure

Chapter 7 bankruptcy may help qualifying individuals discharge certain unsecured debts, potentially making other financial obligations easier to manage.

However, Chapter 7 generally does not provide a long-term method for catching up on missed mortgage payments. Homeowners considering Chapter 7 should understand how bankruptcy exemptions, home equity, and secured mortgage debt may affect their property.

Chapter 13 and Mortgage Payments

Chapter 13 bankruptcy may provide eligible homeowners with an opportunity to address past-due mortgage payments through a court-approved repayment plan while continuing to make required ongoing payments.

Whether this approach is available depends on income, the amount of debt, the status of the foreclosure, and other circumstances.

When to Explore Bankruptcy Options

You may want to learn more about bankruptcy if you are dealing with:

  • Missed or past-due mortgage payments
  • Foreclosure notices
  • Significant credit card or medical debt in addition to your mortgage
  • Creditor lawsuits or wage garnishment
  • Difficulty keeping up with household expenses and debt payments

Foreclosure and bankruptcy involve important deadlines and legal requirements, so waiting too long may affect the options available.

Explore Your Mortgage and Foreclosure Options

If you are struggling with mortgage payments or facing foreclosure, understanding your bankruptcy options can help you determine your next step. Consider speaking with a Chicago bankruptcy attorney about how Chapter 7 or Chapter 13 may affect your home, mortgage debt, and overall financial situation.