Getting behind on payments when you own or rent a home can be detrimental. The process of foreclosure and eviction is an unpleasant one and often results in further financial problems. While filing for bankruptcy may be able to help, there are a few things to consider.
Owning Vs. Renting
If you own a home filing for bankruptcy can be a great tool for halting a foreclosure proceeding. The automatic stay order immediately halts all foreclosure proceedings. However, evictions are highly dependent on the timing of your filing. In most cases, you are given a 30 day notice of an impending eviction. If you file for bankruptcy before the date of the eviction, you will be safe from eviction. However, if your filing falls too close to the end of the 30 day notification for the petition to be filed with the court, or after the 30 day notification, you will likely face eviction.
There are two scenarios in renting that can complicate the eviction and bankruptcy processes. First, if your landlord defaults on the mortgage payments, you may not receive notification of the foreclosure and impending eviction until it is too late. It is not uncommon for renters to be given 24 hours notification to vacate. In this situation, bankruptcy would not be effective in halting the eviction process.
Second, if you default on your rental payments you are likely to receive an eviction notice. Each state had different laws about the eviction process and how much advance notice the landlord is required to provide. Therefore, timing is extremely important in your bankruptcy filing. You must file for bankruptcy before your landlord obtains a court order for the eviction in order to avoid eviction successfully. This means that, if you plan to file for bankruptcy, you should do so as soon as finances become unmanageable or you receive an eviction notice.