Can a bankruptcy stop a foreclosure?

Though bankruptcy can delay a foreclosure, a Chapter 7 liquidation won't stop it for long. Chapter 13, however, was designed with foreclosure problems in mind. A typical foreclosure scenario is where, because payments have been missed, the lender demands immediate payment of a huge sum of money -- perhaps the entire loan amount -- and there is no way you can come up with it.

Filing for Chapter 13 bankruptcy will stop the foreclosure and can force the lender to accept a plan where you make up the missed payments and the loan amount through monthly payments over the next three to five years. To make this plan work, you must be able to demonstrate that you will have enough income in the future to support such a repayment plan.