The Office of Russell Gary Small, P.C. COVID -19 UPDATE: In these uncertain times all of us at The Office of Russell Gary Small, P.C. wants to reassure you that we are open and continue to work for you. We can meet with you via telephone or video conference, and communicate electronically. We are here for you, and encourage you to reach out to us with any questions or concerns. Stay safe and healthy.

Se Habla Español
The Law Office Of Russell Gary Small, P.C.

You Deserve Financial Relief

Headshot of Russell G. Small

3 ways personal bankruptcy can help to prevent foreclosure

On Behalf of | Mar 15, 2024 | Bankruptcy

People fall behind financially for a variety of different reasons. Unexpected medical issues could lead to a combination of major expenses and a sudden drop in income. The loss of a job, possibly because a business closes its doors, could create temporary financial hardship for someone who has previously enjoyed professional success and financial stability.

Someone facing financial hardship might fall behind on their mortgage. People who use a loan to acquire real property are often only a few missed payments away from losing the home where they live. A bankruptcy filing could help someone avoid foreclosure and retain ownership of their home.

The automatic stay delays court proceedings

Foreclosure is a legal process. Lenders typically need to take borrowers to court to gain ownership of real property someone’s fault on their payment obligations. When an individual files for bankruptcy, they receive an automatic stay that prevents collection activity. The ability to delay foreclosure proceedings can give someone an opportunity to correct their financial circumstances and preserve their ownership interest in their home.

A lender may agree to renegotiate

Foreclosure can be an expensive process, and mortgage companies typically prefer to receive payments rather than to sell residential real estate. Those in the process of seeking a bankruptcy discharge can sometimes negotiate with mortgage lenders to modify a mortgage. Lowering monthly payments, possibly by extending someone’s repayment period, could help them avoid foreclosure risk in the future. The filer might be able to lock in an interest rate if they previously had an adjustable rate. The lender might even agree to missed payments to the end of the mortgage instead of forcing someone to catch up all at once.

A discharge can help a homeowner to balance their budget

After a successful bankruptcy filing, the courts grant a discharge of the filer’s eligible unsecured debts. Eliminating medical debts, credit card balances and other financial responsibilities can help someone rework their budget. It can be easier to make mortgage payments without the pressure of unsecured debt.

When foreclosure seems like a possibility, people may benefit from exploring every option for protecting themselves, including a personal bankruptcy filing. Knowing how bankruptcy helps could make a major difference for someone who has fallen behind on their mortgage.

Please call our office at 203-594-6655 to learn how we can help you protect your investment in your home during times of financial hardship.