Declaring bankruptcy may look like the last thing you could and should do when facing with foreclosure and the danger of losing the property. Some people don’t even know exactly when they are entitled to file for bankruptcy and what effects would this have on the foreclosure lawsuit. Some consider that once they are sued for foreclosure, there is not much point in filing bankruptcy any more and it won’t help ending the lawsuit. What people aren’t aware of is that filing bankruptcy can be done even in the late phase of losing the property and court protection can be sought even late.

Being foreclosed recently does not mean you can’t still file bankruptcy and thus avoid losing your house, even if the bank already sued you in court. The federal court system dealing with bankruptcy can still offer protection to homeowners who have been sued by lenders for foreclosure and risk losing their homes. There are bankruptcy laws meant to protect people in such situations.

Mortgage companies use the foreclosure proceeding in their attempt to get their money back from homeowners when they are much behind with their payments or, if payment is not possible anymore, having the county government auction the property off  so that the mortgage is satisfied. There are no secrets about the foreclosure process. There are small differences from other creditors, such as credit card companies trying to force debt payments from borrowers by suing them. What is different in foreclosure is that the property is the one securing the mortgage, so the creditor can force the house sale in order to get the debt back.

Therefore, filing bankruptcy is almost always a solution to stop foreclosure by homeowners, while they still owe the house. This means that filing bankruptcy can happen even a few hours before the property is scheduled to be sold.