Lately, I have been receiving calls from other agents and lenders regarding how bankruptcy can help a homeowner have more time to refinance or sell their home. So I decided to share with the group.
Well, first if there is a foreclosure date already scheduled, you can buy more time by filing a Chapter 13 Bankruptcy – which can be dismissed by the debtor at any time. (You can change your mind). With a Chapter 7 you cannot change your mind. Once filed, you need to follow through. Once the “Automatic Stay” is in place, you can still refinance the home or sell the home through the bankruptcy. There are so many options with Bankruptcy. It is still a last resort option. But it is an option.
I had a client who was refinancing their home, closing date and foreclosure date were in the same week. The closing date was delayed, but of course foreclosure date was still there. Client filed a Chapter 13 bankruptcy to stop the foreclosure and the refinance occurred. Everyone is happy. The same can happen if you are selling a home (not a short sale). The difference with continuing the sale of the home through Chapter 13 bankruptcy is that the original listing agreement and contract would be void and a new one has to be prepared and approved by the bankruptcy court.
I am not an attorney, I just work with one. These are just my experiences, opinions and nothing more. Please seek a lawyer if you need legal assistance.