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Florida homeowners may be interested to know about the possibility of a bank foreclosing a home after its owner has filed for bankruptcy. While the bank does retain the power to foreclose, the length of the process can help the homeowner to save for a future home in the meantime.

According to ABC News, a bank has two ways to take back property after its owner has declared Chapter 7 bankruptcy. One way is through a “deed in lieu of foreclosure,” wherein the homeowner signs over all of their interest in the property, without having to go through foreclosure. The second way is through foreclosure, either judicial or non-judicial. While judicial foreclosure requires the bank to use the courts to regain the property, some states have a process for foreclosures that avoids the courts. This allows the bank to sell the property at auction without having the foreclosure approved by a judge.

Even though the homeowner has gone through bankruptcy, the bank must still go through with one of the above methods for regaining the home. This later foreclosure will be reflected on the credit report of the homeowner, in addition to the bankruptcy, as they are separate proceedings. It can take years for the bank to complete the foreclosure process. During this time, the homeowner should be saving money in order to put a new down payment on a house after the foreclosure is complete.

The loss of a home to bankruptcy or foreclosure can be a difficult and emotional time for a homeowner. An attorney may be able to stop foreclosure of a home in some cases. With proper counseling, a homeowner may be able to get a second chance at keeping their residence.

Source: ABC News, “Foreclosure on Property After Bankruptcy?“, Justin Harelik, October 25, 2013