Bankruptcy

• Bankruptcy is the legal process a person or company may use to reorganize or to liquidate their debt. As the debtor, you have the right to determine what property you want to retain and what property you want to surrender back to the creditor. If you have a home you want to surrender, you may do so in a Chapter 7 or a Chapter 13 bankruptcy.
  
  

Automatic Stay

• The automatic stay is the bankruptcy protection that goes into effect when a case is filed. It stops all collection activity, including any foreclosure proceedings. If you own a home that is in jeopardy of being foreclosed on, filing bankruptcy will stop the process and allow you time to decide how you want to move forward. Once you file bankruptcy, the creditor will have to ask the court permission to lift the stay and take possession of the property.
  
  

Surrender the Home

• If you decide to voluntarily give the home back, you will list it as a surrender in your Chapter 13 Plan or Chapter 7 Statement of Intent, depending on which type of bankruptcy you file. However, that notation does not lift the automatic stay. The creditor may request that you agree to the lifting of the stay, since you are giving the property back, you are not required to do so.
  
  

Motion to Lift Stay

• To have the bankruptcy protection lifted, the creditor files a Motion to Lift the Automatic Stay. As part of the request, interested parties are allowed a certain number of days to object to the request, usually 15 to 20 depending on the district. If no objection is filed, the court will usually sign an order lifting the stay so the creditor may move forward with foreclosure. However, if you file an objection, it will be set for a hearing before the bankruptcy court, adding several weeks to the process.
  
  

Foreclosure Process

• Once the mortgage holder files the motion to lift the bankruptcy protection and receives an order granting the request, they may proceed with the foreclosure process. The foreclosure process itself usually takes months to conclude.