Both Chapter 7 and Chapter 13 bankruptcy can be used to stop foreclosure, though one is usually only a temporary pause whereas the other allows you to work out a plan to keep your home for life.
With Chapter 7, many homeowners who file for bankruptcy end up having to liquidate their home as an asset, through short sale or otherwise (though this isn’t always the case).
Chapter 13 is frequently used by homeowners who would like to keep their home, and can work out a repayment plan to get caught up on past due amounts within the next five years.
If you’re able to exempt your home when filing for Chapter 7, or work out a repayment plan with Chapter 13, then bankruptcy can permanently stop foreclosure.
And even if you aren’t able to keep your home permanently, filing for Chapter 7 will at least get you an automatic stay that provides temporary relief from collection efforts so you can work out a plan for retaining your home or working out a new residence.
Your creditors will be able to file for relief of the automatic stay, meaning they can resume collection efforts, so it won’t last forever. But you will get the chance to breathe a little bit and hopefully work out what to do next.