It can happen to anyone. You fall behind on your mortgage payments and you start to panic. And trust me, there are not many things that can make you panic like the thought of losing your Bloomington home because you fell behind on the payments. However, with Bankruptcy you are in luck. Bankruptcy stops foreclosure and here's how...
Both Chapter 7 and Chapter 13 Bankruptcy can stop a foreclosure sale in progress. Section 362(a) of the Bankruptcy Code itemizes certain collection activity that is prohibited upon the filing of a Chapter 7 or Chapter 13. Upon the filing of a bankruptcy case, Section 362(a) creates an injunction against mortgage companies who are in the process of foreclosing on your home. If you file bankruptcy today, ALL foreclosure activity must be cancelled after filing.
Specifically, Section 362(a)(5) prohibits any act ….to enforce a lien against debtor’s property to such an extent that the lien secures a claim that arose before the commencement of bankruptcy case. In English, if you took a mortgage out against your house before filing bankruptcy, and you fall behind on the mortgage and the mortgage company has served you with a notice of foreclosure with a foreclosure sale date, the filing of a bankruptcy case prohibits the foreclosure from taking place.
Upon Filing Bankruptcy case, the mortgage company must cancel the foreclosure sale. If they refuse to do so, debtor can commence a lawsuit against mortgage company for failing to comply with the automatic stay provisions of the bankruptcy code. The mortgage company may be liable for attorney fees and sanctions if the court finds that they have willingly disobeyed the bankruptcy filing order.
When the time is right, or when you are ready, reach out to Minnesota’s 24/7 Chapter 7 and 13 Bankruptcy help line at 800-551-3292 You will find all the information you need to know about bankruptcy in Minnesota right here.