Do I Have to File Bankruptcy If I ForecloseIt is not mandatory that homeowners file for bankruptcy once their home is in the foreclosure process. There are other options that may be available including asking the lender for payment arrangements or taking part in foreclosure mediation. However, some homeowners who ask, “Do I have to file bankruptcy if I foreclose?” may realize that bankruptcy is their best option based on their situation. When homeowners are informed about the options they have, they will be able to make a decision that will benefit them the most during the foreclosure process.

Ask For a New Payment Arrangement

When you receive a foreclosure notice from your lender, the first thing that you should do is contact the lender. Ask the lender if there are any possible payment arrangements available to you. Forbearance will help to reduce or even eliminate your mortgage payments for several months. The lender would then create new terms for the payments which would help to bring your account up to date over a period of time.

Loan modification programs are also available for homeowners who want to know “do I have to file bankruptcy if I foreclose?” These types of programs are offered by banks and other lenders. The financial institution will require certain information from a homeowner such as:

  • Tax returns
  • Income verification letter
  • Letter of hardship

These documents will help the lender decide if the homeowner qualifies for a loan modification. Loan modification programs offer interest rates that are lower than those connected to the original loan.  These programs extend the time on the mortgage.


There are several states that are part of the Foreclosure Mediation Program. This program helps bridge communication between homeowners and lenders. The homeowner is required to have all required paperwork completed before mediation begins between the homeowner and a bank representative. The mediation provides an opportunity to decide if the loan can modified in a way that will satisfy both parties. Speak with a bankruptcy attorney in your area to find out whether this program is available in your state.

Filing Bankruptcy

If a homeowner has fallen behind on mortgage payments, but wants to keep the house, filing Chapter 13 bankruptcy will stop the foreclosure. The homeowner will create a 3-5 year  payment plan and pay off the amount that is delinquent. In addition, they will continue making regular mortgage payments. Homeowners who fail to follow the terms of the payment plan will be at risk of losing their home and lenders can then request to take repossession of the home and begin the process of foreclosing the home.

Homeowners who are wondering do I have to file bankruptcy if I foreclose should speak with an experienced bankruptcy attorney. The attorney will work with you to find the best solution for you and your family. You can also learn when is it too late to stop foreclosure.

Are you facing foreclosure and you are not sure what you should do? Contact a qualified bankruptcy attorney at Douglas Jacobson Law Firm and discuss your options.