Should I use chapter 7 bankruptcy to stall a foreclosure?

You should probably not file a chapter 7 bankruptcy if your sole purpose is to stall a foreclosure on your home.

Bankruptcies can be used to stall, put off, or temporarily prevent an immediate foreclosure but I usually recommend to my clients that they have some other debt that they can include in the bankruptcy before they file.  Bankruptcy is especially good for eliminating credit card and personal loan debt, auto deficiency balances, and medical debts.  All of those debts can be easily discharged in a bankruptcy.

If you do a bankruptcy and you are going to have to live with the bankruptcy on your credit report I advise that you have some of these debts to discharge in the bankruptcy before you make the commitment to file one.  I don’t recommend that you file a bankruptcy if your only reason is to stall a foreclosure.  It is usually too heavy of a hammer to use to only accomplish this.

For one thing the creditor can file a motion for relief from stay immediately after you file and the creditor can get this granted in 30 days.  Once the stay is lifted then the creditor can proceed with the foreclosure anyway.  Now you have a bankruptcy on your record and you only got a 30 to 60 day stall in your foreclosure.  If you have no other benefit to receive from the bankruptcy then I believe that it is not worth it to file just to get a 30 to 60 day stall.  It’s good to have another reason to file.

So use bankruptcy for foreclosure stall if you receive another debt relief benefit from it.  Don’t just use it just to get a small amount of time when you will be right back where you started from in 30 to 60 days but now with a bankruptcy on your credit report that will show up for years.

E-mail me at farquharlaw@yahoo.com right away if you have a sale date scheduled on your home and you are considering bankruptcy as an option.

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