Bankruptcy and Foreclosure

Many events can lead someone to fall behind on their mortgage payments. Life changes such as a loss of job, medical expenses or divorce can cause an unforeseen financial crisis. Failing to pay any financial debt is serious, but unlike other unsecured debt, it can be much more devastating if you fail to pay your mortgage. Instead of a few harassing creditor calls or a lower credit score, the lender could foreclose on your home and you could lose your home.

The most important action to take when facing Foreclosure is to contact your lender and let them know your payment will be late. Lenders do not want to foreclose. They would prefer to work with you to help get the payments up to date. It does not help to ignore the problem or avoid the lender’s calls. If you have tried to contact your lender and work out a plan and have not had any success there may be other options. One option is filing a Chapter 13 Bankruptcy. A bankruptcy attorney who is experienced with filing Chapter 13 bankruptcies and its impact on the foreclosure process can discuss the best solution for you or your family.

Foreclosure is the process in which a bank or other creditor can repossess property because the owner has failed to meet the terms of the mortgage. The failure to comply with the mortgage is generally defined as defaulting on the loan. If an individual has defaulted on their loan the lender may accelerate the debt and begin foreclosure proceedings. If the creditor accelerates the loan they require immediate payment on the full amount of the loan. Since the debtor rarely has enough money to pay the balance of the note, this action is nearly always the preliminary step to foreclosing on a property.

There are several methods used to foreclose on a home.

  • Foreclosure by judicial sale -

    a sale done under court supervision where the proceeds from the home sale will first go to the mortgage company, lien holders and then to the homeowner.

  • Foreclosure by power of sale -

    the mortgage holder will sell the property and the courts are not involved. Pay outs then are the same as the judicial sale method.

  • Strict foreclosure available in only a few states -

    allows the mortgage holder to gain title after a specified period of time if the mortgagor fails to keep payments current. Under this method he mortgage holder does not have to sell the property.

Avoid Foreclosure with Bankruptcy

Occasionally, debtors circumstances will not allow an acceptable arrangement with the mortgage company. In these cases debtors have the option of filing a Chapter 13 bankruptcy to stop foreclosure action. Under Chapter 13 bankruptcy a re-payment plan is established which will be structured to repay mortgage payments which are overdue.

If you are facing foreclosure fill out the evaluation to the right to have your case evaluated and if possible save your home from foreclosure.


Bankruptcy Term of the Day

Repayment Plan

Chapter 13 bankruptcy repayment plan outlines the fixed payments which a debtor will pay over a 3 or 5 year period to repay their unsecured and secured creditors

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Latest Bankruptcy Question

If I file bankruptcy will I lose all of my property?

All states have bankruptcy exemptions which protect certain assets in bankruptcy.

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