Can I File Bankruptcy after Foreclosure?
When money is tight, it often seems like financial stress comes from all sides – and personal bankruptcy and foreclosure are two such stressors that are often linked together. Many financially strapped Americans wonder whether they can file for bankruptcy after losing a home to foreclosure.
Bankruptcy and foreclosure laws both vary by state. To find out directly about your foreclosure and bankruptcy, a local attorney may be your best source of guidance. To arrange a free, no-obligation consultation with a local attorney, please fill out this form.
Bankruptcy after Foreclosure: What You Need to Know
As with many questions related to bankruptcy law, there's no one-size-fits-all answer to the question of whether a person should file for bankruptcy after mortgage foreclosure – for many people, though, bankruptcy is certainly a legal possibility. Here are some factors to consider when determining whether or not to turn to bankruptcy after foreclosure:
- Your remaining debts: If you have significant debt in addition to your mortgage (which might include credit card debt, medical debt, payday loans, a second or third mortgage, and more), then bankruptcy may be a viable option. Dealing with foreclosure and its related stresses (like finding a new place to live) can be difficult, and worrying about debt collectors during this time may prove too much of a strain. Filing for bankruptcy can, in many cases, eliminate certain debt obligations.
- Your bankruptcy history: If you've received a bankruptcy discharge before, it's important to figure out whether you're eligible to file for bankruptcy protection again. Between two Chapter 7 discharges, you must wait eight years; between two Chapter 13 discharges, there is no waiting period; between a Chapter 7 and a Chapter 13, you must wait four years; between a Chapter 13 and a Chapter 7, six years.
- Your assets: If you're at risk of having a car repossessed but you need that vehicle to get to and from work, bankruptcy may be useful in protecting you from repossession. Bankruptcy's automatic stay is designed to prevent creditors from taking any collection actions, which may allow you to catch up on payments or make alternate arrangements for any assets you are in danger of losing.
How to Know whether Bankruptcy Is Right for You
Bankruptcy was designed to be an option for anyone struggling with debt. However, there are other debt relief options that may have less of an impact for those with more manageable debt that should be considered before turning to bankruptcy.
While there's no simple way to determine whether or not bankruptcy protection will help you address your financial woes, there are some warning signs that you may be in need of the kind of protection bankruptcy can offer.
- You're maxed out on your credit cards and only able to pay the minimum balance each month;
- You're relying on cash advances and/or payday loans to get by month to month;
- You aren't able to afford some or all of your bills and you have no reason to believe your circumstances will change in the near future; and
- You've recently suffered an unexpected financial setback (such as divorce, a serious illness or injury, the death of a loved one or similar).
Talk to a Local Bankruptcy Lawyer Today
Take steps now to find out about what personal bankruptcy might be able to do for you and your finances by speaking with a bankruptcy attorney today.
Laws may have changed since our last update. This is for informational purposes only and is not legal advice. Speak to a local bankruptcy attorney for legal advice about your particular situation.