Bankruptcy Buys You Time In The Property By Delaying Foreclosure
If you file for bankruptcy before your home is sold at a foreclosure sale, you’ll get more time to live in the home. When you file bankruptcy, an “automatic stay” goes into effect. The stay acts as an injunction, or bar, against any attempts by creditors to collect debts or enforce liens, including taking any action related to a pending foreclosure.
Because the automatic stay prevents the foreclosure case from moving forward, you get some extra time in the home. The lender does have the right to ask the bankruptcy court to lift the automatic stay, which would allow it to continue with the foreclosure, but this process will still take some time. In the meantime, you get to remain in the home.
Stripping A Second Mortgage Through Bankruptcy
Not every homeowner has equity in their property. Many factors impact the value of your home. If your home is underwater, meaning you owe more than your home is worth, you do not have any equity in the property. When you have only one mortgage, there is not much you can do. However, if you have a second mortgage and your property is worth less than your first mortgage, you might be able to strip your second mortgage and discharge it as an unsecured debt in a Chapter 13 bankruptcy. If you were not already defaulting on your second mortgage, this option could save you hundreds of dollars a month and remove a significant financial burden. If you were falling behind, this could be a way to ensure that your second mortgage lender never files a foreclosure action. Stripping a second mortgage is a complicated process, so you need a seasoned Norristown bankruptcy attorney.
What Happens After The Case
There is a chance you can keep your home after bankruptcy, but this isn’t always the case. If you don’t have the income to continue paying your mortgage after bankruptcy, you may need to let go of your home.
So why file bankruptcy instead of just accepting the foreclosure?
The main difference between the two is what happens after the sale of the property. In a foreclosure, there is a possibility that you will still owe money to the creditor after the sale if the proceeds of the sale don’t cover the debt. In a bankruptcy, however, all debts will be discharged after the case is closed.
Also Check: What Is Epiq Bankruptcy Solutions Llc
Immediate Benefits Of A Chapter 13 Bankruptcy
Chapter 13 will place an automatic stay on all the debt collections youve been dealing with. This means that all these collections will be immediately stopped, including your foreclosure. Additionally, if you make these payments on time for the designated 3-5 years, the rest of your eligible debts are discharged. Youre completely relieved of those responsibilities without ever having to move out.
Options With Or Without Bankruptcy
Metro-Detroit pundits continue to tout the economic turnaround. However, according to a USA Today report, Michigan homeowners were among the most likely in the country to be entering the foreclosure process as of August 2013. We understand this problem is not going away and many hardworking families could potentially lose their home. And, to make matters worse, families may still be left owing a large amount of money as a deficiency balance after their home is foreclosed.
Detroit Lawyers have the knowledge and tools to help solve a number of home foreclosure issues. Our office can help stop Michigan foreclosures, delay foreclosures, strip second mortgages, wipe out a mortgage deficiency andallow you to catch up on mortgage payments. We can also help save homes via mortgage modifications. Contact Detroit Lawyers at 248.237.7979 today to find out the options you have!
There are a number of options provided to homeowners facing foreclosure. If you are at risk of foreclosure, a qualified Michigan bankruptcy attorney can discuss which option is best for you.
Read Also: How To File Bankruptcy Yourself In Ohio
Put A Temporary Stop On The Bankruptcy/foreclosure Auction Nyc
If there are no defenses available, the next step is trying to stop the foreclosure through the right of redemption. New York provides the citizens of New York with the Right of Redemption. This isnt a redemption period after the foreclosed house is sold. In New York, once the house is sold, its gone.
Instead, the Right of Redemption allows homeowners to redeem the house before the sale is completed. If the delinquent amount gets completely paid, the foreclosure is halted, and the home is redeemed. If this isnt possible, there are still other options to help stop the foreclosure.
With the help of your attorney, you can negotiate a payment plan or a loan modification with your lender.
Guide You Through Your Foreclosure Defense Options
In this situation, you ideally want to find a good cause for setting the foreclosure sale aside. This means that the court finds a reason to throw the foreclosure lawsuit out. Usually, this happens because the lender broke the law, didnt have standing, or was past New Yorks statute of limitations.
New York has several state requirements for foreclosure notices and disclosures. The lender has to let 120 days of delinquency pass before sending a 90-day pre-foreclosure notice to homeowners. There are state requirements for the formatting and content of this pre-foreclosure notice. Only once this 90 day notice is served can the lender file the lawsuit.
The lender has to prove to the court that the summons was properly served to you. There are state and federal requirements for the formatting and content of the summons. Along with the summons, the lender is required to provide federal resources for mortgage assistance.
If your lender breached the loan contract, this would also stop the foreclosure. For example, your monthly payment or interest rate doesnt match the amount listed in your loan contract. Another example would be if your payments werent correctly reported to the credit bureaus. If your credit information was recorded maliciously or you were misguided through the loan application process, your lender may be guilty of fraud or predatory lending practices.
Read Also: Toygaroo Company
How Long To Live In A House Before It Is Foreclosed On After Filing Bankruptcy
Facing foreclosure after bankruptcy is often devastating. However, delays in the foreclosure process often provide additional time in your home, allowing you to save for a security deposit on a new place to live. You may also be able to rent your home from your lender, allowing you to stay in your neighborhood while preparing to purchase a new home within a few years.
Facing Foreclosure Have A Local Attorney Review Your Legal Options
If you’re facing a foreclosure and concerned about your financial future, remember that a bankruptcy filing may help you keep your home or at least soften the blow. You can learn more about your options by meeting with a bankruptcy attorney, who will understand your financial needs and work to make the process as painless as possible. Find a local bankruptcy attorney today.
Thank you for subscribing!
How Your Equity Affects You In Bankruptcy
The market value of your house, minus what you owe on it, is home equity. Lets say the market value of your home is $250,000. You owe $195,000 to the bank on it. That means you have $55,000 in equity. In other words, if you sold your house tomorrow, after you paid what you owe, youd clear $55,000. The debt on your house not only includes the mortgage, but any home equity loans or lines of credit you may have, as well as liens.
The homestead exemption protects equity, up to a point. With the example above, if your state had a $50,000 exemption, then the bankruptcy court would only consider what came after that as equity $5,000. This is a simplification for explanation purposes fees for the bank and trustee are also subtracted, so it would, in reality, be less. If you were using the federal exemption, the exemption would be $29,850 in equity, minus the fees. If you live in a state that only allows you to use the state exemption, and the state exemption is lower, say $10,000, the court would consider $45,000 in equity, minus the fees.
As youll see shortly, while Chapter 13 is designed to help you keep your house, its difficult to do. The courts recommend people filing Chapter 13 bankruptcy hire an attorney or financial counselor who is an expert in bankruptcy to help you navigate the ins and outs.
If You Are Only Filing Bankruptcy To Avoid A Deficiency
If the only reason you are filing for bankruptcy is to avoid a mortgage deficiency balance, you could be jumping the gun by filing before your foreclosure sale because you may not be liable for a deficiency anyway.
What is a deficiency? A deficiency is the difference between how much you owe at the time your home is sold at foreclosure, and its fair market value. For example, if you owe $350,000 on your first mortgage and your home sells for $300,000, the deficiency is $50,000. In many states, the mortgage lender can sue you to collect this amount.
Bankruptcy wipes out your personal liability for a mortgage deficiency no matter when you file. But even without bankruptcy, you still might be able to avoid liability for a deficiency. There are a number of situations where borrowers who are foreclosed on do not owe a deficiency:
- State laws. Some states do not allow a mortgage lender to sue former homeowners for a deficiency, at least for certain types of loans.
- Waiver of deficiency. Many lenders will waive a deficiency in certain situations, especially if you apply for a short sale, deed in lieu of foreclosure, or you have an attorney fighting the foreclosure.
- No collection attempts. And many lenders, even if they obtain a deficiency judgment, won’t try to collect it.
Recommended Reading: How Long After Filing Bankruptcy Can I Buy A Car
Q5 If My House Is Seized When Do I Move Out
When the trustee decides to sell your home, you will have a few weeks to find alternative arrangements and move out. You dont have to worry about immediate eviction. Sometimes, the trustee can allow you to stay until your house is sold.
Even when the trustee decided not to sell your house, and youre facing foreclosure, youd lose your home eventually.
When you file bankruptcy, the automatic stay will be in place. That means your lender should stop collecting from you and the foreclosure process ceases temporarily.
If you decide to surrender your house, you may still have 30 to 60 days before you must move out. Thats because the lender needs to file a motion to lift the automatic stay and follow the proper foreclosure process that will take that much time.
Sometimes, lenders dont resume the foreclosure process until after the court has released your written debt discharge. That happens four to six months after you file bankruptcy.
Bankruptcy Lawyers Serving Arlington Heights And Libertyville
In the unfortunate event that you face foreclosure, bankruptcy can provide an alternative that might allow you to keep your home. Foreclosures occur when a lender, such as a bank, chooses to respond to missed payments by putting the home up for auction and using the proceeds to pay off the loan. The process takes some time and often happens only after several months of missed payments, which gives you time to try various remedies, including bankruptcy.
Don’t Miss: How To File Bankruptcy In Iowa For Free
Can Chapter 13 Stop Foreclosure
Yes, filing for Chapter 13 can stop a foreclosure action. A Chapter 13 bankruptcy in New York can allow you to create a repayment plan for any past due mortgage payments. To save your home, you must at least be able to afford your current mortgage payments while making the payments toward the unpaid late payments. You will have up to five years to pay back your past due payments in a court-ordered Chapter 13 repayment plan. If you can make both your payments, it is likely that you will be able to keep your home
Bankruptcy Strategies To Prevent Foreclosure
If you have an underwater mortgage and are struggling to overcome your mountain of debt, the threat of losing your home to foreclosure is a terrifying reality. Both you and your family could have to deal with the consequences. Fortunately, meeting with a bankruptcy attorney can provide you with the expertise to delay or even avoid foreclosure altogether. A bankruptcy attorney has a plethora of tools and strategies, all designed to help you get back on track with your mortgage payments.
Also Check: Has Mark Cuban Ever Filed For Bankruptcy
Consult A Bankruptcy Attorney In Tampa
If you are having a difficult time meeting your financial obligations, Florida Law Advisers may be able to help. Our bankruptcy attorneys in Tampa have years of experience helping people solve their financial problems. We understand these are very difficult times and we are here to help. In some cases, filing for bankruptcy may be a good solution, however, it is often not the only choice available. The right course of action will depend on the unique circumstances of each case. To see which options may be available to you, contact us to schedule a free consultation.
What Is Chapter 13 Bankruptcy
Chapter 13 is also known as a wage earners plan. You will be able to determine a plan to repay all or part of your debts. With the help of an experienced Jacksonville bankruptcy lawyer, you propose a plan to repay your creditors. The amount you are required to repay is based on several factors, including your income. The time period for this repayment plan is typically three to five years.
There are certain requirements you must meet to be approved for Chapter 13. They include:
- Adequate and fair treatment of priority and secured creditors.
- The plan was proposed in good faith.
- All disposable income used to fund the plan.
- Feasibility the debtor still has enough money for living expenses.
- Financial circumstances have not changed substantially since filing.
- If applicable, all child support and alimony payments due since filing must be current.
Recommended Reading: How Many Times Has Trump Declared Bankruptcy
Free Initial Consultation With Lawyer
Its not a matter of if, its a matter of when. Legal problems come to everyone. Whether its your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sisters brother whos getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation 676-5506. We want to help you!
Ascent Law LLC
Can I Eliminate A 2nd Mortgage In A Chapter 13 Bankruptcy
In some scenarios, Chapter 13 bankruptcy can eliminate your second mortgage. If your home dropped in value, you may not have enough equity in your home for the second mortgage to have a secured lien. If the value of your home is less than the amount owed on the first mortgage , you may be able to eliminate a second mortgage or home equity loan. In this scenario, the debtor would bring an adversary proceeding asking the Bankruptcy Court to strip off the second mortgage and categorize it as unsecured debt in the Chapter 13 repayment plan.
You May Like: Is Taco Bell Filing For Bankruptcy
What Are Your Options If You Are Behind On Your Mortgage
If you have fallen behind on mortgage payments, its in your best interest and the lenders best interest to come up with a plan that works for both parties. Lenders just want their money, and you may just want to keep your home. If you cant catch up, there are other options to stop or deal with the financial results of foreclosure for mortgage arrears.
Ask for a payment deferral. This was a common occurrence during COVID-19, but mortgage lenders have been granting short term deferrals or mortgage extensions in extenuating circumstances long before the recent economic crisis.
Renegotiate the mortgage. If you have a 15-year amortization, the lender may agree to a loan modification to restructure your mortgage under a 25-year amortization, for example, and include all arrears in the new mortgage. You now have no arrears and a lower monthly mortgage payment because its stretched out for a longer time.
Find a new lender. If your lender wont renegotiate, get a payout figure and consider a new mortgage with another mortgage lender. Be aware that alternative, private mortgages come with a higher interest rate to compensate the lender for the added risk. Refinancing is more viable if you have higher equity in the home.
Sell the house yourself before the bank can foreclose. You may get a better price than your lender, but more importantly, if you expect there to be positive equity after the sale, you want to retain any potential capital gains for your own benefit.
What Type Of Mortgage Can You Get After Bankruptcy
Its technically possible to get any type of mortgage loan after a bankruptcy. There are no rules in place that permanently exclude you from getting a certain type of loan because youve gone through a bankruptcy. As long as you meet the waiting period discussed above, youre free to apply. But you can qualify for some types of mortgage loans much easier than others.
An FHA loan could be a great option if you have a bankruptcy on your record. FHA waiting periods are shorter than other types of loans. If you have a Chapter 13 bankruptcy, theres no waiting period at all after a court dismisses or discharges you. FHA loans also have looser requirements compared to other types of government-backed loans.
One of the major benefits of getting an FHA loan after a bankruptcy is its lower credit requirements. Even after a court dismisses or discharges your bankruptcy, it will still negatively influence your credit score. A Chapter 7 bankruptcy will stay on your credit report for 10 years, while a Chapter 13 bankruptcy will stick around for 7.
During this time, your credit score will be much lower than before your bankruptcy. You can buy a home with an FHA loan with a credit score as low as 580 points. You may even qualify for a loan with a score as low as 500 points if you have a down payment of at least 10%. However, at Rocket Mortgage®, the minimum credit score is 580.