The short answer: yes, bankruptcy can stop foreclosure — sometimes temporarily, sometimes for good.
If you’re unaware, foreclosure is the process a mortgage lender uses to take and sell your home after you’ve missed several months of payments. It’s how lenders recover the money you owe. The foreclosure process varies by state. It can be judicial, requiring court approval, or nonjudicial, allowing lenders to foreclose without filing a lawsuit in state court.
In Pittsburgh, foreclosure is a judicial process that usually begins after you’re at least 90 days behind on your mortgage.
Once you file for bankruptcy, an “automatic stay” kicks in. This legal protection immediately stops most creditors from trying to collect what you owe through collection calls, wage garnishments, lawsuits, foreclosure, and more.
While the stay is in place, your mortgage lender is barred from continuing with foreclosure, often for several months or years, unless they successfully petition the court to lift the automatic stay. That means even if your home is just days away from auction, filing for bankruptcy can stop the sale in its tracks.
However, how long the foreclosure is halted (and whether it’s permanently avoided) depends on whether you file Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 vs Chapter 13 – What’s the Difference?
There are two primary types of personal bankruptcy that offer you a path to a fresh financial start if you can’t repay your loans: Chapter 7 and Chapter 13.
They work very differently when it comes to foreclosure.
A word of caution before we continue: If you’re thinking of using bankruptcy to avoid foreclosure, be aware that this strategy has strict limitations. Courts take a dim view of individuals who file bankruptcy repeatedly just to delay or block creditors from collecting what they’re owed.
If you’ve had one bankruptcy case dismissed within the past year, the automatic stay — which for a short time stood foreclosure — will typically only last 30 days. If you’ve had two or more bankruptcy cases dismissed within the last year, you won’t receive an automatic stay at all.
In other words, multiple filings won’t protect you from foreclosure and may harm your credibility with the court.
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Chapter 7: Short-Term Relief, Not a Lasting Fix
One of the main benefits of Chapter 7 bankruptcy is that it wipes out unsecured debts, including personal loans, past-due rent payments, medical bills, payday loans, overdue utility bills, and credit card balances. This is known as a “discharge,” which means you’re no longer legally required to pay those debts.
If you’re buried in bills from a job loss, medical emergency, or other hardship, this can be particularly beneficial.
However, Chapter 7 doesn’t eliminate secured debts like mortgages. If you’re behind on your mortgage and can’t catch up, Chapter 7 won’t stop you from losing your home. As I mentioned earlier, after filing for Chapter 7 bankruptcy, an automatic stay will be placed, temporarily stopping the foreclosure process.
But once your case ends—usually in 4 to 6 months—and the stay is lifted, your lender can resume foreclosure unless you’ve made up the missed payments.
Because Chapter 7 rarely solves mortgage delinquency, most homeowners use it to delay foreclosure, get more time to negotiate with the lender, find other housing, or sell the home on their terms.
It’s important to note that you cannot file Chapter 7 just to stop foreclosure. You must have another valid reason to file, such as significant unsecured debt — which most homeowners in financial trouble already have.
Additionally, not everyone qualifies to file for Chapter 7 bankruptcy.
To be eligible, you’ll need to pass a “means test.” This test looks at your income and expenses to decide whether you have enough disposable income to make meaningful payments to your creditors. The test was created to stop people with higher incomes from misusing Chapter 7 when they could reasonably afford to pay back at least a portion of their debts.
If your income is too low to cover your loan payments, you’ll likely be able to move forward with Chapter 7.
But if the means test shows that you have the ability to repay, you’ll only be able to file for Chapter 13 bankruptcy instead.
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Chapter 13: A Strategic Tool for Stopping Foreclosure
Chapter 13 bankruptcy allows homeowners with consistent income who’ve fallen behind on mortgage payments due to financial setbacks to prevent foreclosure and stay in their homes by restructuring missed payments into a manageable repayment plan.
Here’s how it works: when you file under Chapter 13, you propose a repayment plan outlining how you’ll pay off the mortgage arrears over a three- to five-year period — while continuing to make your regular monthly mortgage payments. That repayment plan is the key difference between Chapter 13 and Chapter 7. Chapter 7 wipes out certain debts but doesn’t give you a way to catch up on mortgage payments.
The Chapter 13 bankruptcy plan must be reviewed and approved by a judge at a confirmation hearing, but you may be required to begin making payments about 30 days after filing, even before the court denies or gives formal approval.
If the repayment plan is approved and you stay current on ongoing and overdue payments, foreclosure is avoided. The legal protection remains in place as long as you meet the plan’s terms.
To qualify for chapter 13 bankruptcy, your income must be sufficient to cover your mortgage, basic living expenses, and all required debts in the repayment plan.
In short, Chapter 13 doesn’t erase your unsecured or mortgage loans. But it gives you a structured, court-supervised way to repay what you owe and stop the foreclosure process, without having to come up with a lump sum to be current.
Is Foreclosure or Bankruptcy Worse for Your Credit?
Foreclosure and bankruptcy cause significant damage to your credit, but bankruptcy is often viewed more negatively by future lenders. Either event can lower your Fair Isaac Corporation (FICO) credit score by 100 to 200+ points, depending on your credit profile at the time.
For example, if your score was strong—around 680 or higher—it could drop into the low 500s or even high 400s. If your score was already low, the decline may be less severe, but the impact is still substantial.
Beyond the immediate drop, bankruptcy and foreclosure leave a lasting mark on your credit history.
Chapter 7 bankruptcy, the most common form of consumer bankruptcy, stays on your credit report for 10 years from the date you file. Chapter 13 bankruptcy remains for 7 years, also counted from the filing date.
A foreclosure appears on your credit report for 7 years, but the clock starts from the first missed payment that began the foreclosure, not from the date the property is repossessed.
Your credit score can start to recover within two years if you keep your remaining accounts in good standing. Until then, you may find it difficult to get approved for new credit or loans, and if you’re approved, you’ll likely face higher interest rates and less favorable terms.
Because of its longer duration and broader financial implications, bankruptcy should be considered a last resort. Before pursuing it, explore alternatives such as loan modification, forbearance, or a short sale, which may help you avoid foreclosure and bankruptcy altogether.
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