Can Bankruptcy Stop Foreclosure in Florida? Understand your rights

Written By: Attorney Robert Stiberman | Bankruptcy Updated April 18, 2023

Foreclosure is a legal process that allows a lender to repossess a property if the borrower fails to make mortgage payments. Foreclosure can be a devastating experience for homeowners, but fortunately, there are ways to stop it. One option is to file for bankruptcy. In this article, we’ll explore how bankruptcy can stop foreclosure in Florida and what you need to know.

How Foreclosure Works in Florida

In Florida, foreclosure is a judicial process. This means that the lender must file a lawsuit in court to obtain a judgment of foreclosure. Once the judgment is entered, the property can be sold at a public auction to the highest bidder. The proceeds from the sale are used to pay off the mortgage debt.

Can Bankruptcy Stop Foreclosure in Florida?

Filing for bankruptcy can stop foreclosure in Florida, at least temporarily. When you file for bankruptcy, an automatic stay goes into effect, which stops all collection actions, including foreclosure. This means that the lender, unless granted permission from the bankruptcy court,  cannot proceed with the foreclosure while the bankruptcy case is pending.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

There are two types of bankruptcy that individuals can file in Florida: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is also known as “liquidation” bankruptcy. It involves the sale of your nonexempt assets to pay off your debts. Chapter 13 bankruptcy, on the other hand, is a “reorganization” bankruptcy that allows you to keep your assets and repay your debts over time.

The type of bankruptcy you choose will depend on your financial situation and your goals. If your main goal is to stop foreclosure and save your home, Chapter 13 bankruptcy may be a better option, as it allows you to catch up on your mortgage payments over time.

The Automatic Stay and Foreclosure

As mentioned earlier, the automatic stay is a powerful tool that can stop foreclosure in its tracks. The automatic stay goes into effect as soon as you file for bankruptcy, and it prevents the lender from taking any collection actions against you, including foreclosure.

However, there are some exceptions to the automatic stay. If the lender obtains permission from the bankruptcy court, they may be able to proceed with the foreclosure. Additionally, if you have filed for bankruptcy multiple times within a certain period, the automatic stay may be limited or not apply at all.

What Happens After Filing for Bankruptcy?

After you file for bankruptcy, you will need to attend a meeting of creditors, where the bankruptcy trustee and your creditors can ask you questions about your financial situation. If you filed for Chapter 13 bankruptcy, you will also need to propose a repayment plan that will allow you to catch up on your mortgage payments over time.

If your bankruptcy case is successful, your debts will be discharged, and you will no longer be responsible for paying them. However, if you filed for Chapter 13 bankruptcy, you will still be responsible for making your mortgage payments according to the terms of your repayment plan.

Pros and Cons of Filing for Bankruptcy to Stop Foreclosure

Filing for bankruptcy to stop foreclosure can be a good option for some homeowners, but it’s important to weigh the pros and cons carefully before making a decision.

Some potential benefits of filing for bankruptcy to stop foreclosure include:

• The automatic stay can provide immediate relief from collection actions, including foreclosure.
• You may be able to catch up on missed mortgage payments and keep your home.
• You may be able to discharge other debts, which can free up money to pay your mortgage.

However, there are also some potential downsides to consider:

• Filing for bankruptcy can be expensive and time-consuming.
• Your credit score will be negatively affected by the bankruptcy.
• Bankruptcy may not be able to prevent foreclosure in all cases.

Frequently Asked Questions

Q: Can filing for bankruptcy stop a foreclosure sale in Florida?
A: Yes, filing for bankruptcy can stop a foreclosure sale in Florida. The automatic stay will prevent the lender from proceeding with the foreclosure while the bankruptcy case is pending.

Q: Can I keep my home if I file for bankruptcy in Florida?
A: It depends on the type of bankruptcy you file and your specific situation. If you file for Chapter 13 bankruptcy, you may be able to keep your home and catch up on missed mortgage payments over time. However, if you file for Chapter 7 bankruptcy, you may be required to sell your home to pay off your debts if you do not properly exempt your home or if you do not stay current with your mortgage or other debt secured by your property.

Q: Will I be able to discharge my mortgage debt if I file for bankruptcy in Florida?
A: Filing for bankruptcy in Florida may discharge your personal liability for mortgage debt, but it may not remove the mortgage lien on your property. This means that even if you are no longer personally responsible for the debt, the lender may still foreclose on the property if you fail to keep up with mortgage payments. However, filing for Chapter 13 bankruptcy may allow you to catch up on missed mortgage payments and keep your home.

Conclusion

If you’re facing foreclosure in Florida, filing for bankruptcy may be able to help you stop the process and keep your home. However, it’s important to weigh the pros and cons carefully and to consult with an experienced bankruptcy attorney before making a decision. With the right guidance and support, you can navigate the bankruptcy process and find a solution that works for you.

Case Study: Saving Homes and Resolving Unsecured Debt: How Stiberman Law Helped a Deerfield Beach Client Through Bankruptcy

Issue:

A client in Deerfield Beach had been struggling to modify his mortgage or get into an affordable payment plan with his private lender for many years. This led to constant threats of foreclosure and caused a significant amount of stress for the client.

Solution:

Our law firm filed a Chapter 13 Bankruptcy for the client, which allowed them to get an affordable repayment plan to pay off their mortgage and stop the foreclosure process. Through the Chapter 13 Bankruptcy, the client was also able to discharge their unsecured debt and get a fresh start financially.

Conclusion:

With the help of Stiberman Law, the client was able to achieve financial peace and save their property from foreclosure. Our experience and compassion in handling Chapter 13 Bankruptcy cases in Deerfield Beach allowed us to provide a solution that worked for our client’s unique situation. We are committed to helping clients turn the page and start anew through the bankruptcy process. If you’re facing financial difficulties, we’re here to help.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney adept at handling Chapter 7, 13, and 11 filings, with more than 15 years of experience in bankruptcy cases. Robert represents clients in both consumer and business bankruptcy ... Read More