You missed a few mortgage payments and now you've received a Notice of Default or Notice of Acceleration of Mortgage. Disaster! You'd been talking to your lender about a mortgage modification or forbearance. Or you just started a new job and were optimistic about turning things around -- until that notice showed up. Is there a way to buy some time?

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Yes, there may be more than one way. But bankruptcy is a sure bet to stop foreclosure, at least temporarily. Get your filing in before the foreclosure sale and it stops in its tracks. When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an Order for Relief and part of that order is an automatic stay. The automatic stay commands your creditors to stop any collection activities immediately, no exceptions. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while the bankruptcy is pending--typically for three to four months. However, there are ways for mortgage lenders to get around the automatic stay.

Motion to lift the stay

The lender may get the bankruptcy court's permission to proceed with the sale by filing a "motion to lift the stay. The court grants it if it is obvious that even the protection afforded by bankruptcy won't free up the cash needed to make your mortgage payments each month. If you choose a Chapter 13 bankruptcy, you must be able to make up your missed payments (arrearages) over the three to five year period that you are in the plan. If you file Chapter 7, you have to pay the arrearages and continue to make your monthly payments or the lender can foreclose. So if the lender is granted permission to proceed with the foreclosure, you may not get the full three to four months. But even then, the bankruptcy will typically postpone the sale by at least two months, or even more if the lender is slow in pursuing the motion to lift the automatic stay.

Foreclosure notice already filed

Unfortunately, bankruptcy's automatic stay doesn't stop the clock on the advance notice period that most states require before a lender can sell your property or file a motion to lift an automatic stay. For example, before selling a foreclosed home in California , the lender must give you at least three months' notice. If you receive a three-month notice of default, and then file for bankruptcy after two months have passed, the three-month period would elapse after you'd been in bankruptcy for only one month. Then the lender could file a motion to lift the stay and request permission to schedule the foreclosure sale.

Chapter 13 bankruptcy

Chapter 13 can help you eliminate your second mortgage. If your first mortgage balance exceeds your home's value, (which is possible if the home has dropped in value or you have a mortgage with negative amortization), you may not have equity to secure the junior liens. That allows the Chapter 13 trustee to "strip off" the junior mortgages and recategorize them as unsecured debt --like credit card debt, which,under Chapter 13 takes last priority and often does not have to be paid back at all.

Foreclosure mediation

Some states, like Nevada, require foreclosure mediation to take place if you request it -- the lender representative must meet with you in the presence of a mediator and try to work out a modification or other solution before the lender is allowed to foreclose. So you may not have to file for bankruptcy protection to get more time to work out a solution. Look up "foreclosure mediation" and your state online to see if there is a program for you.