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Does bankruptcy restart the foreclosure process?

Your home is in foreclosure. You've missed too many payments. The bank is repossessing the home and they're going to sell it. A date has even been set and it appears that the sale is imminent.

Since your financial situation isn't what you'd like it to be and you're over your head in debt, you file for bankruptcy. Suddenly, that sale gets cancelled. It can't proceed while you're in bankruptcy, and you get to stay in the house.

You know that bankruptcy will likely take anywhere from one and a half to three months. When it's done, does the foreclosure process have to begin again entirely, with notices from the lender and everything else? Or does it just pick up where it left off?

Typically, it just starts again where it left off. That means the new sale date can be set far faster than it was the first time.

The key thing to note is that bankruptcy doesn't actually cancel the foreclosure process at all. It may have cancelled that sale date, but that's just because it put an automatic stay on the foreclosure. Essentially, this just pauses the process because the court must conclude the bankruptcy case first. When it's done, the automatic stay is lifted and other court cases, like foreclosure, can move forward.

Of course, bankruptcy may eliminate many unsecured debts. You could find that your home is affordable again when you're done. Just don't assume the automatic stay buys you more time than it really does, and make sure you know exactly how these two legal cases work together.

Source: Bankrate, "File bankruptcy to stall foreclosure?," Justin Harelik, accessed Feb. 01, 2018

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