Bankruptcy

• Pages: 233-238

Bankruptcy

Chapter 23

233

Often, homeowners have turned to bankruptcy for no other reason

than as a last resort to save their home, or be relieved of their mort-

gage debt. ManyAmericans with the goal of saving their home are

willing to do almost anything to achieve that end, and the credit

implications of bankruptcy seem a small loss in comparison to be-

ing able to keep their home. There are other methods to resolve

debt such as credit cards, medical bills, student loans, etc., with the

increasing incidence of debt relief companies, although one must

be sure that they choose a reputable company. But no debt relief

company can potentially provide the relief to save a home or relin-

quish a debt the way that bankruptcy can.

As with other debt collection processes, a foreclosure and home

loan collection activity must at least momentarily cease when a

homeowner files bankruptcy, due to the imposition of an automatic

stay on the collection efforts of all the debtor’s creditors.1The auto-

matic stay provision was added to a debtor’s bankruptcy protec-

tions by the 1978 Bankruptcy ReformAct.2Congress has recognized

1. See H.R. REP. No. 95-595, p.340 (explaining the automatic stay pursu-

ant to 11 U.S.C. § 362).

2. Ann K. Wooter, J.D., What Constitutes “Willful Violation” of Auto-

matic Stay Provisions of Bankruptcy Code (11 U.S.C.A. § 362(k)) Sufficient to

Award Damages—Chapter 7 Cases, 23 A.L.R. FED.2D339 at § 2 (2007).