How to Stop Foreclosure with Bankruptcy in Missouri

Foreclosure can be a daunting experience for any homeowner, but if you're facing this situation in Missouri, filing for bankruptcy might be a viable solution to help stop the process. Understanding how bankruptcy works in relation to foreclosure can empower you to make the best decisions for your financial future. This article explores how you can stop foreclosure with bankruptcy in Missouri, detailing the types of bankruptcy available and the steps you need to take.

Types of Bankruptcy Available

In Missouri, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each has its own implications for foreclosure.

Chapter 7 Bankruptcy: This type allows for the complete discharge of unsecured debts, such as credit card debt and medical bills. However, it can lead to the loss of non-exempt assets, which may include your home if you're behind on mortgage payments. While Chapter 7 can halt foreclosure temporarily, it does not provide a long-term solution to keep your home unless you can catch up on payments quickly.

Chapter 13 Bankruptcy: For many, Chapter 13 is the more suitable option if the goal is to stop foreclosure and keep the home. This type of bankruptcy creates a repayment plan lasting three to five years, allowing you to reestablish your financial footing. You can make up missed mortgage payments while keeping your home, which is critical for homeowners facing foreclosure.

Steps to Stop Foreclosure with Bankruptcy

1. Consult with a Bankruptcy Attorney: Before moving forward, it's essential to speak with a qualified bankruptcy attorney who understands Missouri laws. They can help you weigh the pros and cons of your bankruptcy options and guide you through the process.

2. Gather Your Financial Documents: Prepare all necessary documentation, including income statements, bank statements, mortgage documents, and a list of debts. This information is crucial for accurately filing your bankruptcy petition.

3. File Your Bankruptcy Petition: Your attorney will help you file the bankruptcy petition in the appropriate Missouri federal court. Once filed, an automatic stay goes into effect, which prevents lenders from proceeding with the foreclosure process.

4. Complete Credit Counseling: Missouri law requires you to complete a credit counseling course within 180 days before filing for bankruptcy. This step is important for evaluating your financial situation and exploring alternatives to bankruptcy.

5. Monitor Your Repayment Plan (for Chapter 13): If you opt for Chapter 13, stay current with your repayment plan. You must adhere to the terms set forth in your court-approved plan to avoid dismissal of your case and the possibility of resuming foreclosure proceedings.

Understanding the Impact on Your Credit:

It’s important to note that while filing for bankruptcy will impact your credit score, it may provide a fresh start by eliminating some debts and stopping foreclosure. Furthermore, rebuilding your credit after bankruptcy is entirely possible with responsible financial practices.

Contact Your Lender:

As you navigate the bankruptcy process, consider contacting your lender. Some lenders may be willing to work with you to modify your mortgage or establish a payment plan, especially once they are aware you’re filing for bankruptcy.

Conclusion

Filing for bankruptcy can be a powerful tool to stop foreclosure in Missouri. By choosing the right type of bankruptcy and following the necessary steps, you can protect your home and regain control over your financial situation. Always seek professional legal advice to ensure you make informed decisions tailored to your unique circumstances.