Filing Bankruptcy After Foreclosure
If you are faced with any of these situations, bankruptcy might still be your best option. If you remain in your home after a foreclosure sale and you are being evicted by an attorney for the new homeowner or lender, bankruptcy can halt an eviction suit, at least temporarily. Once the bankruptcy is filed, the automatic stay provided under the Bankruptcy Code goes into effect and stops the continuation of the suit, at least until the automatic stay is lifted by the local Bankruptcy Court. Filing bankruptcy under these circumstances will not provide you with an indefinite holdover in your home, but it will provide you with additional time to find other living arrangements and remove your personal belongings.
If your lender is suing you for the balance of your mortgage post-foreclosure, bankruptcy can also help. It is very uncommon for lenders to sue on first mortgages, but lawsuits seeking deficiency judgments on second mortgages have become more popular, especially in areas where the downturn in the housing market and accompanying home values were hit the hardest. If they are successful in obtaining a deficiency judgment, they can take advantage of any collection remedy available under state law, which typically includes recovery of non-exempt assets, garnishing bank accounts and even garnishing wages. Before it gets to that point, seek advice from an attorney who specializes in debt negotiation and/or bankruptcy can help. Filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy can result in a discharge of the deficiency judgment and provide a resolution to an otherwise stressful financial situation.