Steps You Can Take In Order to Help Stop Foreclosure On Your Home
Today, there are many reasons why homeowners are facing a foreclosure, such as an illness, divorce or job loss. There are just as many reasons why people are facing bankruptcy.
The economy is vastly different than fifteen years ago. Today, it’s not uncommon to see a sheriff’s sale notice on a home. However, there are things that you can do to stop the foreclosure process.
Ways to Avoid Foreclosure
1. Work with your lender. Most people assume their lenders won’t help them and will just go ahead and foreclose on the home.
Today’s lenders realize that everyone has debts. It would be in their best interest to help you, rather than face the backlash, especially on social media. You can ask your lender to:
-Create a repayment plan to delay legal action. This is called forbearance.
-Forgive a payment.
-Spread out missed payments.
Also, your loan is not set in stone. You can ask to change the terms of the loan. You may be able to add back payments to it. You can also apply for a loan for the missed payments.
2. Short sale. A short sale is when the net proceeds fall short of the debt secured by liens against the home. The homeowner sells the home to a third party.
The lien holders (including a second mortgage lender) have to accept the price for the short sale to work. The homeowner must submit a “loss mitigation” application. It includes several documents, including recent tax returns, a financial statement, and a hardship statement.
3. Bankruptcy. When you file for bankruptcy, an automatic stay goes into effect. This stops creditors from collecting on debts (e.g., phone calls).
It’s interesting to note that foreclosure is a method of collection. So, you are temporarily protected from the mortgage company. The idea of a bankruptcy is to give you another chance to start over.
With a Chapter 7 bankruptcy, the mortgage company can continue the foreclosure if you were behind on your payments at the time of filing. If you were current on your payments, then the bankruptcy court will most likely allow you to keep making your mortgage payments, while your other debts are wiped. This frees up money to continue making your mortgage payments.
With a Chapter 13 bankruptcy, you have agreed to a payment plan for the debts that are listed in the bankruptcy. You can make up mortgage arrears in a Chapter 13.
However, you cannot do this with a Chapter 7. An experienced bankruptcy lawyer can give you more information.
4. Deed-in-Lieu. You are surrendering your deed to the lender. This affects your credit just as a foreclosure does. If approved, the lender will send you:
–The deed that transfers ownership of the home.
-An estoppel affidavit. This document sets the terms of the agreement and will include a provision that you are doing this of your own volition.
5. Mortgage Assumption. A new person assumes your mortgage.
The property is transferred (sold), and the buyer takes over the existing loan. Some lenders will make the buyer go through an approval process.
If there is a “due on sale” provision in the loan, the mortgage is not assumable. This means that if the property is transferred, the new owner will be responsible for the full balance of the loan and repay it in a shortened time period.
However, there are exceptions to the “due on sale” provision. It cannot be enforced on a transfer from:
-A parent to child.
-A relative upon the seller’s death
-Resulting from a divorce.
If the mortgage is in default at the time of transfer, the new owner will need to “cure” the default to stop the foreclosure. The buyer will have to make a large payment to make up for the missed payments or create a repayment plan with the lender.
6. Sell the Home. You can also sell the home, and the proceeds go to paying off the mortgage.
Don’t Face Foreclosure Alone
At Cibik & Cataldo, we can provide the help your need in the form of a bankruptcy to stop the foreclosure process. Whether you are filing for a Chapter 7 or a Chapter 13, we can save your home. The thought of losing the home you have worked so hard for is stressful.
We have the experience and the track record to prove we are your best defense. We offer a free consultation to help you understand the facts on bankruptcy and how it applies to saving your home.
We will make sure that you fully understand what will happen before and after the discharge. We have helped nearly 30,000 clients start over financially, and we can help you too. Call or email us today to set up your appointment.
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seek bankruptcy protection under federal law