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An automatic stay might help you avoid foreclosure

Between a monthly car payment, utility bills, a home mortgage and a job that never seems to pay quite enough, it is easy to fall into a never-ending cycle of debt. As a Monmouth County resident, you probably have friends and neighbors in the same situation. If you are having trouble making ends meet, it may not be long before you start receiving late payment notices.

The bank may have already begun sending you late payment notices that contain the threat of foreclosure. While some lenders might be willing to work with you to modify the loan, there are even more that will not. Instead, these lenders will start the foreclosure process. That involves the creditor repossessing the house and reselling it at a public auction. The lender will then use the money from the auction toward whatever remains unpaid on your mortgage, plus any legal costs incurred. By filing bankruptcy, you might be able to save your home.

Automatic stay

If you choose to file bankruptcy in order to reorganize and pay off your debt, the court will issue an Order of Relief. This court order includes an automatic stay that forces creditors to stop all collection proceedings. If the bank has scheduled a foreclosure on your home, the stay will stop the process for the time it takes to finalize the bankruptcy. This could buy you three to four months to get your mortgage payments under control.

Exceptions

In general, there are two exceptions to the automatic stay. One way lenders get around this is to file a motion to lift the stay. In other words, the lender will ask the bankruptcy court for permission to move forward with foreclosure proceedings that it has already started. If the court agrees, you may not get that extra few months to work things out. The other exception occurs when the lender has already filed a foreclosure notice. If the lender has already sent you notice of foreclosure before you began bankruptcy proceedings, you may not be able to fully benefit from the automatic stay.

If you have an overwhelming amount of debt, you should consider taking the first step toward reorganizing your finances. By choosing to file for bankruptcy, you might have the chance to get back on top and effectively manage your debt.

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