If you’ve received a foreclosure notice on your Delray Beach home, you may feel like you’re out of options. The stress of losing your home is overwhelming—but here’s the good news: bankruptcy can immediately stop foreclosure in its tracks.
Thanks to a powerful legal protection known as the automatic stay, filing for bankruptcy halts foreclosure proceedings the moment your petition is filed with the court. And depending on your situation, a Chapter 13 bankruptcy may allow you to catch up on missed mortgage payments and keep your home permanently.
In this article, we’ll explain:
- What the automatic stay is and how it works
- How Chapter 13 bankruptcy helps you stop foreclosure and repay arrears
- How Chapter 7 bankruptcy may offer temporary relief
- The importance of acting before your home is sold at auction
The Automatic Stay: Immediate Protection From Foreclosure
When you file for bankruptcy—whether Chapter 7 or Chapter 13—the court issues an automatic stay under 11 U.S. Code § 362. This stay acts as a legal injunction, stopping creditors from continuing collection efforts, including:
- Foreclosure sales
- Evictions
- Wage garnishments
- Lawsuits and phone calls from debt collectors
How Fast Does It Work?
Immediately. The moment your bankruptcy petition is filed with the U.S. Bankruptcy Court, the stay goes into effect—even if the lender is hours away from auctioning your home. The foreclosure must pause, and the lender cannot proceed unless and until the court grants special permission (more on that below).
What Happens After the Automatic Stay? Once the stay is in place:
- Your mortgage lender must halt foreclosure efforts
- All other creditors must stop contacting you
- You and your attorney can work on a plan to resolve your debts and potentially save your home
How Chapter 13 Bankruptcy Stops Foreclosure Long-Term
If your goal is to stay in your home and catch up on missed mortgage payments, Chapter 13 bankruptcy is often the best option.
Chapter 13 is a form of bankruptcy that allows you to restructure your debts through a 3–5 year repayment plan based on your income. Unlike Chapter 7, it does not involve liquidation of your assets.
A major benefit of Chapter 13 is that it allows you to repay your mortgage arrears over time while keeping your home. Here’s how it works:
- File your petition – the automatic stay stops the foreclosure.
- Propose a repayment plan – this includes repaying missed mortgage payments over a set period (usually 36 to 60 months).
- Make monthly plan payments – these go to a bankruptcy trustee, who then pays your mortgage lender and other creditors.
- Stay current on your mortgage – you must continue making your regular mortgage payments going forward.
Example: You’re $15,000 behind on your mortgage, and the lender has scheduled a foreclosure sale.
- You file for Chapter 13, stopping the sale immediately.
- Your repayment plan includes the $15,000 arrears, spread over 60 months ($250/month).
- As long as you make your plan payments and stay current on your regular mortgage, the lender cannot foreclose.
What About Other Debts?
Chapter 13 can also help you manage:
- Credit card debt
- Medical bills
- Car loans
- IRS tax debt (in some cases)
Chapter 7 Bankruptcy: Temporary Relief From Foreclosure
Chapter 7 bankruptcy is known as liquidation bankruptcy. It can eliminate unsecured debts like credit cards and medical bills, but it does not provide a way to catch up on mortgage arrears.
When Is Chapter 7 Useful?
- You need temporary relief from foreclosure to buy time.
- You want to eliminate other debts to free up money for your mortgage.
- You plan to surrender the home but want to avoid a deficiency judgment.
Limitations of Chapter 7 in Foreclosure
- It won’t help you keep the home long-term unless you’re current on your mortgage.
- The lender can request the court to lift the automatic stay, especially if there is no equity or if you’re not making payments.
In short, Chapter 7 may delay foreclosure by a few weeks to a few months, but it’s not a long-term solution unless you’re current or able to catch up immediately.
What If the Lender Files a Motion to Lift the Stay?
In some cases, the mortgage lender may file a motion for relief from stay, asking the court to let them continue the foreclosure. This is more likely to happen if:
- You’re not making your mortgage payments.
- You filed a previous bankruptcy recently.
If the court grants the motion, the foreclosure process can resume.
The Foreclosure Sale Deadline: Timing Matters
Filing bankruptcy before your home is sold at auction is critical. Once the Sale Occurs:
- Your legal ownership ends.
- Bankruptcy cannot reverse a completed foreclosure sale.
- You may be evicted by the new owner (often the bank).
To protect your home, you must file before the scheduled foreclosure sale date. Don’t wait until the last minute—court processing times, paperwork errors, or filing after hours can result in missed deadlines.
How to Prepare for Bankruptcy and Save Your Home
Foreclosure and bankruptcy law are complex. A skilled bankruptcy attorney can help you:
- File quickly to trigger the automatic stay
- Choose the right chapter (Chapter 13 vs. Chapter 7)
- Build a repayment plan that works with your income
- Deal with creditors and the bankruptcy trustee
Organize Your Financial Documents
Have the following ready:
- Mortgage statements
- Foreclosure notice or complaint
- Proof of income (pay stubs, benefits)
- List of debts and creditors
- Tax returns (typically 2 years)
Act Quickly and Strategically
Delays can cost you your home. Consult with an attorney as soon as you receive a foreclosure notice or fall behind on your mortgage.
Conclusion: Bankruptcy Can Be the Lifeline You Need
Losing your home to foreclosure isn’t inevitable. With the power of the automatic stay and the structured repayment options offered under Chapter 13, bankruptcy can provide a real opportunity to save your Delray Beach home.
Whether you need short-term relief or a long-term repayment solution, Klein Law Group is here to guide you through the bankruptcy process and fight for your home.
