Bankruptcy could be the relief you need if you are facing foreclosure. Filing for bankruptcy does not necessarily mean you will not lose your home, but it could have an impact on what you ultimately owe on your loan. If you are facing foreclosure, here is what you need to know about using bankruptcy to alleviate debt and possibly save your home.  

What If You Want to Keep Your Home?

Like other homeowners in your position, you are probably concerned with keeping your home. Whether or not that is possible depends largely on when you file for bankruptcy and how willing the lender is to work with you.  

When you file for bankruptcy, you gain a few months to decide what to do next. The bankruptcy comes with an automatic stay that effectively delays your foreclosure. Even if your home is scheduled to be sold in the next few days, the stay will temporarily protect you. What happens next depends on you and your lender.  

If you want to keep your home, you need to either come up with the arrears on your home loan or negotiate with your lender. Chances are, your lender will be willing to work with you. There are no guarantees that the lender can recoup its losses if it goes through with the foreclosure, so working with you is the best scenario for your lender.  

What If the Home Has Already Been Sold?

Bankruptcy can still be beneficial to you if the lender has already processed the foreclosure and sold your home. Although you cannot get your home back, you could possibly get rid of any deficiencies that remained after the home was sold.  

When a lender sells a foreclosed home, there is a possibility that the amount the home sells for is not enough to cover the amount owed on the loan from the original owner. The difference between the remaining loan amount and the sale price is known as a deficiency.  

If there is a deficiency remaining after your home is sold, it is likely that the lender will come after you for the amount owed. If you file for bankruptcy, the debt can be discharged. Even though the home has been sold, you do not have to worry about any lingering debts from it.  

Foreclosures and bankruptcies are complex. If you want to use a bankruptcy to save your home, talk to an attorney like Jeffrey S. Arnold, Attorney at Law, P.C. as soon as you realize that paying for the home is not possible.