Few people or organizations want to seem Scrooge-like at Christmas. The enduring image of Charles Dickens’s fictional character is a cautionary tale of pushing people too hard at the holidays.
It is perhaps no surprise, then, that Fannie Mae and Freddie Mac, the giant, quasi-public mortgage lenders, have announced a moratorium on evictions from December 17 to January 2. The moratorium applies to single-family homes, as well as two-to-four unit buildings that are in foreclosure.
If you read the fine print, however, you’ll notice that foreclosure proceedings are allowed to continue. So while this moratorium is not exactly a lump of coal, it’s at best a very temporary halt to evictions. It does nothing to really stop the process.
By contrast, filing for bankruptcy can offer a path toward genuine debt relief, not just a temporary reprieve against eviction. Consider, for starters, the protections that come with the automatic stay in bankruptcy.
The automatic stay that comes immediately with a bankruptcy filing is an injunction that carries legal force. It does not depend on the seasonal goodwill of a mortgage lender or other creditor. Instead, as soon as a bankruptcy is filed, the automatic stay directs that all collection efforts must stop. That includes foreclosure proceedings.
With the automatic stay in place, you can explore bankruptcy exemptions and other means to keep your house. Whether a Chapter 7 or a Chapter 13 bankruptcy will make more sense for you depends on your unique circumstances. But either one is surely better than a fleeting halt to evictions at the holidays.
Source: “Fannie, Freddie to Halt Foreclosures for Holidays,” American Banker, Brian Browdie, 12-3-12
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