Here is how Chapter 7 works.
When someone files Chapter 7 bankruptcy, all assets are frozen. The attorney will create what is called an automatic stay. Meaning everything "Stays" put. The homeowners can't buy anything, they can't sell anything, and they can't even give anything away. If they try to sell their home, they couldn't. If they try to give away money in their savings account, they can't. Any unsecured debt like credit cards, unsecured loans, etc. are eliminated or wiped out. They do not exist anymore. Then the trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, equipment) anything of value and decide what must be liquidated to pay some of the debt that was wiped out.
If the homeowners are in the middle of foreclosure, a chapter 7 will stop the foreclosure process. Usually banks will then ask the trustee to release the property from the automatic stay so they may continue with the foreclosure process. Once the property has been released from bankruptcy, the foreclosure process starts right where it lefty off. Typically you have anywhere from 3-5 weeks until the foreclosure process begins again.
Learn how Chapter 7 Bankruptcy and Foreclosure work: Watch the video below
Contact an San Diego County foreclosure defense lawyer at the firm for skilled legal assistance with a bankruptcy options consultation.