One of the main reasons for filing bankruptcy for many people is the automatic stay. What exactly is the automatic stay when it comes to filing for bankruptcy? The automatic stay is essentially an order from the court to all creditors to stop all further collection activity including but not limited to harassing phone calls, letters, lawsuits and most critically foreclosures.
The number one reason a debtor takes advantage of the automatic stay stipulation in the US bankruptcy law is to stop a foreclosure. With the US economy in the state of turmoil due to the housing crisis, many homeowners are struggling to make their mortgage payments and they are facing the possibility of foreclosure.
With the filing of a chapter 7 bankruptcy or a chapter 13 bankruptcy the debtor is given an automatic stay and according to the bankruptcy law this will then stop any and all foreclosure proceedings against the debtor. This can be particularly essential in attempting to save your home if you are in a position where you may have tried a loan modification or if you are proceeding with a short sale and you need a little more time to close your real estate transaction. Sometimes you may be on the very last leg of the short sale and you may be very close to closing your escrow however you have a foreclosure sale date and if you cannot close before that date your property will be foreclosed upon.
The automatic stay in a file for bankruptcy will give you that extension that you need to either short sell your home, successfully implement a loan modification agreement with your lender or better yet if it is a chapter 13 bankruptcy, you may be able to keep your home. The automatic stay remains in effect until either your bankruptcy is discharged or a reorganization plan has been implemented.
If you are facing a foreclosure and you are thinking that the automatic stay when filing for bankruptcy may help you to retain your home, you should seek the advice of a professional licensed bankruptcy attorney. Only bankruptcy attorneys know the intricacies of the US bankruptcy law and they will be able to answer all your bankruptcy questions regarding foreclosure and other issues.
To take the first step in finding a bankruptcy lawyer, you may simply fill out a free bankruptcy case evaluation online at BankruptcyIntro.com. After completing a simple two minute bankruptcy evaluation online, you will then be connected with bankruptcy attorneys in your area that will be able to give you a free bankruptcy case review.
Jay King is a owner of BankruptcyIntro.com. We’ve all heard of large companies filing for bankruptcy or “going bankrupt” and most of us would think that particular company must be in trouble.