a service of the Moran Law Group
The filing of bankruptcy triggers the automatic
stay which stops all creditors from any action to collect their
claim including foreclosure.
In Chapter 7,
the stay lasts only as long as the property is not abandoned by the
trustee, as either valueless to the estate or as exempt,
or until the case is closed.
A creditor secured
by the house can seek relief
from the stay to complete the foreclosure if there is danger that
the secured claim will become greater than the value of the security
during the bankruptcy.
Since the creditor's lien
is not eliminated by the bankruptcy, Chapter 7 provides temporary relief
from foreclosure, but no lasting solution.
In contrast, in Chapter
13 the stay lasts as long as the case is pending. Chapter 13 is
designed to allow debtors to cure defaults in their home mortgages by
paying the arrearage over as long as 3 to 5 years.
on Chapter 13.
More on foreclosure in
California foreclosure timeline
Secured debt in Chapter 7
Mortgage debt after bankruptcy
Back to bankruptcy FAQs