Foreclosure and Bankruptcy
We stop foreclosures all the time. Every day. Every week, every month.
You can save your home.
Even if you are months and months behind in your mortgage payments, it is still possible to save your home. Even if you have received court papers and are in a foreclosure lawsuit right now, it is still possible to stop the foreclosure with a bankruptcy filing and save your home.
Chapter 13 bankruptcy is used by thousands of people every single day to stop foreclosures and save their homes.
By filing a Chapter 13 bankruptcy, you can get up to five years to catch up all of the missed payments.
However, and this is important, you need to get started before the sheriff sale arrives.
Once the sheriff’s sale happens, a bankruptcy is not going to save your home. You may still want to file bankruptcy to discharge the deficiency that will result from the foreclosure sale, and sometimes this is a very large amount.
But if you want to save your home you an do it, provided that you file your Chapter 13 bankruptcy before the sheriff’s sale happens .
Once you file a Chapter 13 bankruptcy the foreclosure process is immediately stopped.
You will begin to pay your normal monthly payments through the bankruptcy trustee, and you will also pay an additional amount on top of this to catch up the missed payments.
In some cases, we are able to remove second mortgages from the property in Chapter 13, and treat them as if they were in unsecured debt like a credit card or medical bill. In these cases, the second mortgage debt is only paid pennies on the dollar and, at the end of this successfully completed Chapter 13 plan the second mortgages completely gone.
This cannot be done in a Chapter 7.
So for example, if your house payment is $1000 a month And you are five months behind at the time you file your bankruptcy then you’re going to be paying your $1000 per month mortgage payment plus an extra $84 per month towards your $5000 arrearage.
Depending on what other debt you have, there maybe something paid to Other creditors.
Perhaps you have a car that needs to be paid off in the bankruptcy plan as well. But so far as the house is concerned, you’re going be paying your missed payments back in about $84 per month for five years.
Now that’s a deal that no mortgage creditor will ever approve and it’s unlikely that anyone would be able to achieve a loan modification with these terms.
But, and mortgage companies don’t want you to know this, this is your right under federal law.
Anyone who qualifies for Chapter 13 has the right to make up missed payments on their mortgage and save their homes from foreclosure.
Foreclosure starts with a court notice
You will normally not get this notice until you’ve been about three months behind on your payments.
After the foreclosure starts, you will see in your court papers that you have 28 days to file an answer.
This means a written document that is actually filed with the clerk of courts and mailed to the attorney who is representing the mortgage company.
Typically this is not done by homeowners because the foreclosure complaint states that the payments have been missed and they have actually been missed so really there is no argument about this.
Depending on which county you live in, it takes months for the foreclosure process to complete.
For those people living in Hamilton and Montgomery counties, our larger counties, it takes about 8 to 10 months or sometimes more.
If you live in Warren or Butler or Clinton counties, or one of the less populated counties, the foreclosure process is completed much more quickly.
However, they always take at least a few months to complete a foreclosure so you do have time – but not forever.
You have the right to stop the foreclosure at any time by filing a bankruptcy. Depending on what your goals are, you may want to keep the house, or you may not want to keep the house.
The real estate market has suffered terribly in our current economy.
Many people that we see have decided that they no longer wish to keep their houses because they are property values have declined so much that they doubt if their house will ever be worth what they owe on it.
In these cases, it is possible to file a bankruptcy that provides for the real estate to be surrendered to the mortgage company.
This can be done in both Chapter 7 and Chapter 13.
If you choose to keep your home and file a Chapter 13, then you’ll catch the missed payments up over a period of up to five years and at the end of your Chapter 13 your mortgage should just where it would have been if you had never gotten behind in the first place.
If you choose to surrender your real estate, because you think that’s what’s in your best interest, then the mortgage debt will be wiped out and you will owe nothing after the foreclosure has completed.
Unfortunately, in some areas where there are numerous foreclosures and property values have declined more than the average, mortgage companies are not foreclosing on houses.
They simply do nothing and let the houses sit there.
This creates a pretty serious problem for the homeowner, because in many cases the homeowner has moved on but still owns the property.
Because the homeowner still owns the property, the homeowner is still liable for the condition of the property, Has to keep the grass cut and the exterior of the building maintained in a manner that complies with building and zoning codes.
Failure to do so can result in consequences that you really want to avoid.
It’s best to discuss all of this with us so that a specific recommendation for your circumstances can be made.
There are different options that you might want to consider if this is your situation, including a deed in lieu of foreclosure or even a short sale.
However, all of these options have potential downsides that you need to be made aware of before you can make the right decision.
Even if you decide to let the home go, you might want some additional time to live in the home.
Bankruptcy can give you this additional time.
So long as we file a bankruptcy before the sheriff’s sale, whether the bankruptcy is Chapter 7 or Chapter 13, and regardless of whether or not your bankruptcy intends to let the house go back to the mortgage company or to save it, the sheriff’s sale cannot be held. It is canceled.
This gives you additional time to stay in the house even if you ultimately wish to surrender it back to the bank.
The decision that you make with respect to your real estate debt is an important one.
Normally this is the largest debt that you have and the decisions you make will follow you for a long time.
Many people today are making the decision to get out from under bad real estate debt and get a fresh start with bankruptcy.
We know all the options and we want you to know them as well.
If you want to find out what your options are, simply call us for free consultation ! We will carefully and thoroughly analyze your entire financial situation and let you know what options you have so that you can make the best decision for yourself and your family.