Forclosures Go Hand In Hand With Filing Bankruptcy
Since the beginning of January 2007, there has been hundreds of articles written about the mortgage and real estate prices. As of early 2009, foreclosures and individuals filing bankruptcy are at an all-time high. Housing prices have fallen off the cliff, along with housing sales. And even if you want to buy, no one is making mortgage loans. People who thought their future was secure with the large amount of equity in their biggest investment, their home, now find themselves underwater owing more on mortgages than their property is actually worth.
It’s bad, so bad that we haven’t seen a mortgage or real estate market like this since the Great Depression. And despite these horrors, not much has been done to fix it. The TARP program seems to have just paid Wall Street hundreds of billions of dollars without getting much for the taxpayers’ investment. Credit markets are still tight, and nothing has happened to help ordinary folks deal with the high mortgages, low prices and record foreclosures.
As real estate values plummet and foreclosures skyrocket, more and more debtors are inquiring to see if bankruptcy can stop foreclosure. The short answer in most cases is yes. With a few exceptions, a bankruptcy filing will stop a foreclosure proceeding and save a home. The bigger question, however, is how long will the foreclosure process be stopped and are there any other benefits that will accrue that are related to the home.
Once a personal bankruptcy is filed, the automatic stay protections are put into place. If a debtor is on title to the property, or is on the loan to the property, the automatic stay will stop foreclosure in most cases. Nevertheless, a foreclosure may still continue in limited situations such as when multiple bankruptcy cases have been successfully filed or the property was transferred to the debtor’s name immediately prior to the filing.
