Many times individuals filing for bankruptcy would be fine financially if it were not for their foreclosure. They are current on car payments and credit card bills. But for their mortgage dilemma, they would never consider filing bankruptcy. The good news is that Congress is continuing to work on a plan to help individuals keep their homes. Although it's yet to materialize, these homeowners could actually rework their mortgage without filing personal bankruptcy. Mortgage companies realize that a properly defended foreclosure can tie up the home in court for a long time. During that entire litigation process, the mortgage company is receiving no mortgage payments. Despite that fact, mortgage companies refuse to negotiate because they are armed with the knowledge that today's bankruptcy laws are inadequate to save the homeowner who has fallen behind in payments.
A bankruptcy filing will stop foreclosure, at least temporarily. As soon as you file for bankruptcy, a court order called the automatic stay, goes into effect immediately. With the number of foreclosures surpassing record levels last year, individuals facing foreclosure will often ask whether a bankruptcy filing will really stop a foreclosure.
The automatic stay is one of the most important aspects of filing bankruptcy. The automatic stay not only prohibits the creditor from pursuing the foreclosure action, it also prohibits the state court hearing the foreclosure case from taking any further action. In fact, the automatic stay stops other federal courts from taking any action on a case affected by a bankruptcy filing. Even if a foreclosure proceeding has already been filed, you can still stop it when filing bankruptcy. When being in financial despair it's important to consult with a bankruptcy attorney to not make any moves that could jeopardize your financial future further. Be proactive when it comes to financial matters and this will help protect any assets you have.