If a Tennessee resident is struggling to keep up with a mortgage payment, it may be possible to ask for a loan modification. However, there is no guarantee that a lender will allow this to happen. If a lender does not want to modify the terms of a home loan, a homeowner could choose to file for bankruptcy. This may postpone the foreclosure process, which generally begins two or three months after a missed mortgage payment.

Foreclosure can be delayed in a bankruptcy case because the judge will typically order a stay of creditor collection activities. This is generally true whether a person files for Chapter 7 or Chapter 13 bankruptcy. It is possible for a lender to ask that the stay be lifted. If this happens, a foreclosure could proceed even while a bankruptcy case is still ongoing.

In a Chapter 13 case, a foreclosure may be averted if a homeowner can repay the missed payments while staying current with all future payments. In a Chapter 7 case, the debt could be forgiven, but it may not delay the foreclosure process. Furthermore, debtors may lose other possessions in a Chapter 7 case. For many homeowners, the credit consequences of filing for bankruptcy are significant but less severe than a foreclosure. Typically, getting a mortgage after a foreclosure is difficult or impossible.

Individuals who are seeking a fresh financial start may be able to find it by filing for bankruptcy. In addition to getting current on a home loan, it might help to reduce or eliminate medical, credit card or personal loan debt. An attorney may be able to explain other benefits of doing so such as getting an automatic stay against creditor activities. A stay also prohibits creditors from contacting debtors about a balance owed.