Is it too late to file bankruptcy if the foreclosure or repossession has already happened?

 

One of the most frustrating situations I encounter as a bankruptcy attorney is being too late to help someone.  Oftentimes, a person doesn’t contact me until after a repossession or foreclosure occurs.  Is it too late to save your property at that point?

Generally speaking, one of the greatest benefits to filing a bankruptcy is the immediate effect the filing has on repossession and foreclosure efforts by creditors.  The bankruptcy creates an “automatic stay” which prohibits any collection effort by creditors.  I compare it to a force field that protects your property.  However, the automatic stay does not go into effect until the day of filing.  Therefore, if the repossession or foreclosure has already taken place, a bankruptcy won’t undo it.   If you wish to save your property, you must speak to a bankruptcy attorney about filing BEFORE a repossession or foreclosure happens.  A bankruptcy will stop foreclosures and repossessions and allow you an opportunity to keep your property.



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