Securities Fraud Lawyers Blog
By Alfred Villoch, III, Esquire, at Savage, Combs & Villoch, PLLC
If you’re a few months behind on your mortgage payments, the bank that loaned you the money to purchase your home (or alternatively, the company that services the loan) will likely file a lawsuit with the intent to sell your house and use that money to pay down your loan. If the money achieved from the sale is not enough to pay down the entire loan, the bank can still pursue you for the remainder owed or the deficiency. This process is commonly called foreclosure and the pursuit of a deficiency judgment.
If you file bankruptcy before the foreclosure sale, however, you will get temporary relief from the foreclosure. Specifically, upon the bankruptcy filing, you will get the benefit of the “automatic stay,” which stays all actions of your creditors not brought before the federal bankruptcy court, and this will include the foreclosure action. It is important to understand that this stay is often times only temporary and will depend on how active your bank is in pursuing the foreclosure.