Facing the prospect of losing your home is a terrifying, overwhelming experience. However, many families are faced with this situation each day. An accidental injury, sudden illness, job loss, or loss of a spouse can make it impossible for a family to pay the mortgage payments. For many people, once they become two or three payments behind on their mortgage loan, it is impossible to catch up the payments without assistance.
Instead of going through a foreclosure, you may want to consider filing for bankruptcy relief. Filing a bankruptcy case can stop the foreclosure process to give you time to reorganize your debts or find another place to live.
Bankruptcy lawyers can explore various options for dealing with a foreclosure during your free consultation. You may have several options available. A bankruptcy attorney can help you choose the best option for you and your family.
No one should face losing their home alone. Let a bankruptcy lawyer review your situation to determine how a bankruptcy case can resolve a foreclosure action against your home.
In many states, the mortgage company must hire an attorney to file a foreclosure lawsuit with the court. You are served with this lawsuit and given a certain number of days to respond. If you fail to respond to the lawsuit, the mortgage company may apply for a default judgment allowing it to sell your home on the next foreclosure sale date. A judicial foreclosure can take several months to complete. However, a non-judicial foreclosure may be completed in less time.
Some states allow for a simplified process when a mortgage contains a clause allowing for a non-judicial sale. State law usually requires the lender to mail the property owner a letter of demand giving the owner a certain number of days to pay the past due amount. If the owner fails to pay the amount due before the due date, the mortgage company can file a notice with the court and proceed with the non-judicial foreclosure sale. The sheriff or other court official sells the property on the courthouse steps to the highest bidder.
The foreclosure laws vary by state. If you are behind on your mortgage payments, it is best to consult with a bankruptcy attorney immediately. Because a foreclosure action can move very quickly, you may not have a lot of time to file a bankruptcy case to stop the foreclosure action.
A no-cost, no-obligation case review is an opportunity to learn how filing bankruptcy could help you keep your home.
Instead of paying the entire past due balance owed to the mortgage company, a Chapter 13 plan allows you to spread that amount over the term of the plan. Most Chapter 13 plans are calculated for a term of 60 months. Therefore, you can take up to 60 months to catch up the past due mortgage payments. As long as you continue making your current mortgage payments and make your Chapter 13 plan payment each month, you can keep your home.
For many debtors, once they file a Chapter 13 case, they are in a better position to pay their mortgage payments going forward. The Chapter 13 repayment plan can also include your vehicle payments, past due income tax debt, and unsecured debts. Because you are no longer attempting to pay all your creditors in full each month, you have enough money to pay your mortgage payments./p>
Once you complete your Chapter 13 plan, your mortgage payments are current, and you may not owe any other debts if all your debts were paid through the plan or discharged. Therefore, filing a Chapter 13 bankruptcy case can save your home and place you on the road to being debt-free in five years except for your mortgage payments.
Schedule your free consultation with a Chapter 13 bankruptcy attorney. It does not cost you anything to get the advice you need to save your home from foreclosure.
If you have a second mortgage, you might be able to include it in your bankruptcy plan depending on the amount owed on the account. In some cases, a debtor may get rid of a second mortgage by valuing the mortgage at zero. Your home must be worth less than you owe on your first mortgage to value a second mortgage at zero. A Chapter 13 bankruptcy attorney can discuss the possibility of eliminating a second mortgage during your free consultation.
A foreclosure action is “stayed” or paused when an individual files a bankruptcy case, including a Chapter 7 case. The automatic stay provisions of the Bankruptcy Code prevent creditors from taking further action to collect a debt without court approval, including proceeding with a foreclosure action.
However, unlike a Chapter 13 case, there is not a repayment plan in a Chapter 7 case. You must catch up the mortgage arrearage immediately, or the mortgage company may obtain court approval to proceed with the foreclosure proceeding. So, why would anyone file a Chapter 7 case if the house cannot be saved?
There are two reasons why an individual may want to file a Chapter 7 case even though he or she cannot afford to keep a home. First, the Chapter 7 filing delays a foreclosure sale because the mortgage company must file for court permission to proceed with the foreclosure. Therefore, the filing may give the debtor at least another two months to find another place to live.
Second, and more importantly, a Chapter 7 case discharges any legal liability to pay a deficiency judgment. If the mortgage company does not receive full payment for the loan when the home is sold, it may request a deficiency judgment against the borrower. A deficiency judgment is a personal judgment that can remain on your record for years, and the mortgage company may take other actions to collect the debt. In states that permit wage garnishments for judgment debts, this could be a problem.
However, a Chapter 7 case discharges any deficiency owed to the mortgage company. You do not need to worry about the company obtaining a personal judgment against you. Furthermore, the Chapter 7 filing discharges other unsecured debts to give you a fresh start as you begin to rebuild after a financial crisis.
If you are facing foreclosure, do not wait until it is too late to stop the foreclosure. Schedule a free consultation with an experienced bankruptcy lawyer.