Bankruptcy is a way for people who owe more money than they can pay right now ("debtors"), to either work out a plan to repay the money over time in a chapter 11, chapter 12, or chapter 13 case, or wipe out ("discharge") most of their bills in a chapter 7 case. When an owner files for bankruptcy protection, the foreclosure is automatically stayed until a release is obtained from the court by the lender. [11 United States Code §362(a)]

Unles the owner-in-bankruptcy can make up the default as part of a reorganization plan, bankruptcy only delays the inevitable. Once the stay is lifted, the foreclosure sale will take place no sooner than seven calendar days later. [CC §2924g(d)]

This decision is not to be made lightly and requires careful consideration. Seeking professional advice is strongly suggested as bankruptcy will remain on your credit history for up to 10 years. This makes renting an almost impossible task.
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1. When is bankruptcy a good option?
If you have little or no equity in your home and no other assets (anything you own with marketable value such as bank accounts, boats, motorcycles, stocks, or the like), and you have a lot of debt in addition to your home loan, bankruptcy might be your best option.

2. Can I Sell my home during bankruptcy?
In some cases this may be possible. Check with your legal advisor.
Click here for court locations and specifics for your area and state.

3. If none of the above are options, how does the Foreclosure Process work?
Foreclosure begins with notice of default which you may have already received. Next, the lender publishes a notice of sale. The final step is the public auction of your home. At the auction, your home is either sold for cash in full, otherwise the title is returned to the lender. You must IMMEDIATELY vacate.

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