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In many ways, your home is sacred. Falling behind on bills can lead you into a downward spiral where you begin missing mortgage payments. If you can’t get back on track, the lender will likely foreclose on your home.
This is especially frustrating if your debt was caused by circumstances beyond your control, like medical debt or because you lost your job. If you find yourself in this situation, you’re probably wondering if filing for bankruptcy can help you save your Aurora home from foreclosure. It’s probably why you’re reading this page right now.
Thanks in part to our current economic climate, high inflation and a high cost of living have made it common for many Colorado residents to fall behind on paying their mortgages. Having to choose between which bills get covered each month or providing shelter and food for yourself and your family is a choice you shouldn’t have to make.
The process of foreclosure is not quick. Usually, lenders don’t go down this path until the homeowner has missed a few mortgage payments. This gives borrowers time to consider potential alternatives to foreclosure.
One possible scenario is filing for bankruptcy, which we will take a closer look at on this webpage. Our experienced Aurora debt relief attorneys have designed this page to give you information on Chapter 7 and 13 bankruptcies and educate you on how bankruptcy can help stop foreclosure for debt-saddled residents in Arapahoe County and the surrounding area.
Many unscrupulous bankruptcy attorneys will tell you that bankruptcy will be a cure-all for your financial problems. The goal of our Aurora debt relief lawyers is to be as honest with you about bankruptcy as possible. To that end, you should know that while there are many benefits to filing for bankruptcy in the right situation, the legal process cannot magically resolve all of your debt issues.
One common question our experienced legal team hears all the time is whether filing for bankruptcy will help a person who is behind on their mortgage payments avoid foreclosure.
As in so many legal matters, the answer to this depends on your specific circumstances, though the following is a brief overview of how bankruptcy may be able to help. For a more specific answer to this question, we encourage you to reach out to our Aurora bankruptcy attorneys. We offer a no-cost case evaluation to potential clients in order to answer all of your bankruptcy-related questions.
The first and perhaps biggest legal help filing for foreclosure-related bankruptcy is called the automatic stay.
As soon as your Aurora bankruptcy lawyer has submitted your bankruptcy petition to the court, the automatic stay goes into effect, which stops creditors from continuing foreclosure proceedings against you for the duration of the bankruptcy proceeding.
For those of you seeking to file bankruptcy for other debt-related issues beyond foreclosure, the automatic stay also halts all creditor collection attempts for the duration of your bankruptcy case. That means that if you’re being harassed by debt collection agencies trying to collect on past due debt, the calls, e-mails, and letters must stop as soon as your file for bankruptcy.
It must be said that the automatic stay does not stop foreclosure proceedings entirely, merely halts them. Your lender must either wait until after bankruptcy to restart the foreclosure process or seek to have the automatic stay lifted by the court, a process that can take months.
Chapter 7 bankruptcy, commonly referred to as “simple,” “straight,” or “liquidation” bankruptcy is the most commonly filed chapter of bankruptcy filed in Colorado. During a Chapter 7 bankruptcy, a court-appointed bankruptcy trustee will liquidate all of your non-exempt assets and use the proceeds to pay off your priority debts. Any unsecured debt left over at the end of this process is then discharged/erased by the Federal Bankruptcy Court.
Thanks to the automatic stay, Chapter 7 bankruptcy can temporarily stop foreclosure proceedings, however, its ability to ultimately save your home from foreclosure is limited. If you want to permanently stop foreclosure, you’ll need to get current on your payments by the end of your Chapter 7 bankruptcy. What it all comes down to is the automatic stay gives you the time that you need to get the money to get caught up with your mortgage.
It’s also worth noting that if you are able to keep your home through Chapter 7 bankruptcy, at the end of your bankruptcy case your mortgage lender will still have a lien on your home, which cannot be discharged. That means that your lender may still proceed with foreclosure if you fall behind on your mortgage payments. If you wish to keep your home, you must continue making your mortgage payments during and after your Chapter 7 bankruptcy.
For debt relief seekers in Aurora who can make their monthly mortgage payments as they are now, but have arrearages or back payments due, filing for Chapter 13 bankruptcy may be the best option. This is because filing Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows you to include your past due mortgage payments in your bankruptcy plan to avoid foreclosure.
With Chapter 13 bankruptcy, all of your debts are combined into one manageable payment meant to help you pay down your outstanding debt over the course of several years. You and your experienced Aurora Chapter 13 bankruptcy attorney will look at your financials and come up with a reasonable monthly payment that you will make to the bankruptcy court over the course of three to five years. Generally, we’ve found that because the Chapter 13 bankruptcy process takes so long to complete, you will have plenty of time to get current on your mortgage payments, avoiding foreclosure at the end of your bankruptcy case.
It’s worth noting that it may not be in the best interests of Aurora residents facing bankruptcy to keep a home they cannot afford to make payments on. Speaking about your situation with an experienced and knowledgeable bankruptcy attorney can allow you to examine your options and choose the most appropriate one for the good of your financial future.
If you are concerned about a bank foreclosing upon your Aurora home, know that you may have financial options to stop it from happening. Whether or not you decide to keep your home, it’s important to look toward your financial future in the long term. In many cases, bankruptcy is the most favorable alternative to having significant debt and collection actions following you wherever you go.
The good news is that you may be able to alleviate both your debt woes and halt foreclosure at the same time by filing for bankruptcy.
There can be a lot of tense, personal feelings wrapped up in the idea of being foreclosed upon, so it’s important to talk to someone with an objective understanding of the law. Working with an experienced Colorado bankruptcy attorney can help you determine an overall strategy for managing and reducing your debt for a long time.