Filing a Chapter 7 bankruptcy temporarily stalls your lender’s right to foreclosure, until it gets permission to go forward with the foreclosure proceedings. However, doing so could have other very serious consequences.
We caution visitors against falling for some of the schemes that have been developed that entice a homeowner who is facing foreclosure to transfer a portion of the title to his home to a third person, who then files for bankruptcy. While that may temporarily delay the foreclosure courts are getting wise to the scheme and the delay may be very temporary. Typically the homeowner pays large fees and loses his or her home anyway. Some of the people engaging in such schemes have also been charged with fraud.
If bankruptcy seems to be an option, consider a Chapter 13 or "wage earner" repayment bankruptcy as an alternative to a Chapter 7 straight bankruptcy. Under a Chapter 13 plan, it is possible to make up the missed payments out of your income through the repayment plan.
If you face foreclosure, bankruptcy may or may not make sense, depending on your other obligations and income sources, and the advice of an attorney will be very helpful. Click on our discussion of "Consumer Bankruptcy".