Bankruptcy is able to temporarily stop a foreclosure (usually only for about 3 – 4 months). When bankruptcy is filed, the court will issue what is known as an “automatic stay” which is used to prevent all creditors from collecting payment from you. This includes home foreclosure. So even if you have lost at court and the home has a sale date scheduled, filing for bankruptcy will postpone the sale.
The advantage with filing chapter 7 bankruptcy is you will be able to live in your home for another 3 -4 months for free while the bankruptcy is pending. This should give you time to save money to find a new living situation.
Suggestion of bankruptcy
You do not necessarily need to go through with filing bankruptcy, there is the option to file a suggestion of bankruptcy. This lets the courts know that you are about to file for bankruptcy and places the case on an automatic stay.
You don’t want to frequently do a suggestion of bankruptcy because the court will catch on. They will see that you have had multiple suggestions but never go through. An attorney should be able to help you through the process.
One potential problem with using the bankruptcy strategy is if the lender files a “motion to lift the stay” and it gets approved by the bankruptcy court. This allows the lender to still proceed with the sale after a few months.