Why do lawyers advertise filing bankruptcy to protect your home from foreclosure ?
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Answer:
I would file 13 and sell it later. It is a bad time to sell right now.
Coach
When you file for Bankruptcy, the court enters a stay order that prohibits all further legal action against a debtor. You can certainly delay foreclosure with a 7 by dragging it out some, but it may be difficult to attract a buyer in the middle of a bankruptcy and foreclosure. Also, it may take longer to close on the sale than the stay from the court will protect you. If you file a 7 and are able to avoid all unsecured debt, you may be able to work out some sort of a reaffirmation plan with the mortgage holder. This will probably require you coming up with all past due payments and costs though. The 13 will protect you only if you can include the home in the payment plan and the court approves that plan. Also, even if you sell at this point, the buyer will have to pay the full amount of the outstanding mortgage plus all costs in order to clear the lien. It is really difficult to give you any advice without knowing your exact situation with equity, etc. Sorry to see you in such a tough spot.
I'm not sure why lawyers advertise bankruptcy as a way to stop foreclosure. The truth of the matter is that bankruptcy will only delay a foreclosure. Once a bankruptcy is filed you are granted a "stay" on your debts and obligations. Your lender knows this and soon after the bankruptcy is filed, will file for a, "Relief from Stay". The judge will almost certainly grant the relief from stay, as the judge knows this is the only way the lender can protect their asset. Whether or not ch. 13 will provide enough time really depends on your local housing market and your state's foreclosure laws.
In California, the state provides 111 days for you to resolve your delinquent payments, other states are much faster. You can check here for more info: http://www.foreclosurelaw.org/.
There are many pro-bono legal aid groups throughout the country that will assist you with your bankruptcy at little cost. You can begin searching for help at the American Bar Association: http://www.abanet.org/legalservices/find...
You can also check with your local Real Estate Investment Group as there are certainly knowledgeable investors there who are willing to help you through the foreclosure process. They all aren't sharks, some are genuine in the desire to help and can often stop the foreclosure, repair your credit and put some cash in your pocket.
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