Bankruptcy Foreclosure

Bankruptcy May Prevent Foreclosure

Foreclosure is the legal process that allows the lienholder on your home to regain possession of their property.
Foreclosures are scheduled for one day a month, generally the first Tuesday of the month. It is required that notice of the pending sale be given to all parties of interest 21 days before the sale. Notice will normally be a certified letter sent to everyone listed on the Deed of Trust. No matter what your financial problems are, it is always very important to pick up any certified mail.

If your house is currently in the foreclosure process, it may be advisable to first try to work out a special repayment plan, or a forbearance agreement with your mortgage company. You might be surprised at what they are willing to do, and it cannot hurt to ask.

Once this option has been exhausted, and you have not been able to resolve the problem, a Chapter 13 bankruptcy might be the best avenue to prevent losing your home. If you choose to file, a Chapter 13 would allow you to keep your home, and repay the arrearage (or amount you are behind) through a plan approved by the Court. Under the bankruptcy code it is possible to take a maximum of five years to repay your mortgage company back the arrearage. It also allows you to address your entire financial picture, ultimately offering you the ability to restructure your budget. It will not allow you to change or lower your house payment. You must still abide by the terms of your Deed of Trust.

A bankruptcy case may be filed to stop foreclosure all the way up to the day of the sale. It is inadvisable to wait until that time to make your decision. If you are uncertain, you should make an appointment with us for a free initial consultation. We will answer all your questions and give you our opinion on your best course of action.

While a case can be prepared in a limited time, it is wise to make your decision at least a two weeks before the sale, and schedule your appointment for filing well in advance of the sale. Once prepared, it is frequently possible to hold that caseuntil the day before foreclosure to allow you to put one final month in your plan, and give you some extra breathing room before resuming mortgage payments.

Finally, losing your home is always a very emotional situation, but it is also important to realistically look at the financial position that house places you in. Frequently changes in employment, marriage, or other factors make it inadvisable to try to keep your home. It is also not true that once you allow a foreclosure you cannot purchase another home.

Many times people realize that they were putting everything into their homes with no room to breathe or relax. Therefore, effective reorganization does not always mean continuing with a burdensome mortgage. Should you decide to surrender your home,you may wish to file a Chapter 7 instead. Either way, you can voluntarily give back, or surrender, your home and not retain any liability to it. This decision should be made with the help of your attorney before preparing your case