If you are fearful that your current financial situation may cause you to lose your house, you may want to consider filing for bankruptcy. Though this may seem like going backward instead of forward, a bankruptcy filing may offer you several protections. One of these protections is an automatic stay. Read on to discover how an automatic stay can protect your house and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can ensure your house is secured.

What is an automatic stay and how can it protect my house?

By definition, an automatic stay is an order that the Kentucky bankruptcy court may impose on all creditors as soon as you submit your bankruptcy petition. This order may bar these creditors from participating in any further collection activities against you until your bankruptcy proceedings have officially come to a close. Such collection activities may include, but may not be limited to, the following:

  • Making incessant phone calls to your personal cell phone.
  • Sending constant letters to your residential home address.
  • Using deception to make you accept collect calls or pay for telegrams.
  • Asking you for a greater amount of money than your remaining debt.
  • Taking unnecessary legal action against you.

Likely the most important of all, the court may stop your mortgage lender from issuing a notice of foreclosure on your house. This may apply even if you submit your bankruptcy petition on the same date of your foreclosure. And this means that you may keep your house, at the very least, throughout your bankruptcy process.

However, your mortgage lender may still attempt to fight this automatic stay. In other words, they may file a motion to the court and argue that you have not complied with the mortgage requirements set forth by the bankruptcy code. So, you must not give them any reason to make this argument.

How else can bankruptcy protect my house?

With bankruptcy also comes homestead protection laws. These laws are intended to set aside a specific amount of your real property, otherwise known as your homestead, that your mortgage lenders are not allowed to foreclose upon.  In the state of Kentucky, you are allowed to set aside up to $5,000 worth of your homestead. This is in addition to protecting up to $3,000 worth of your personal property.

Similar to an automatic stay, these laws will simultaneously apply when you submit your bankruptcy petition. Though, there may be an exception to this if you are past due on your taxes to the state of Kentucky, Kentucky counties, and/or Kentucky municipalities.

It should go without saying that you must consult with a competent Louisville, Kentucky consumer bankruptcy lawyer immediately. Give us a call whenever you can.