If you are behind on paying your mortgage and are potentially facing foreclosure on your house, you may be able to prevent it from happening. Even if you cannot save your house, there are strategies that may delay a foreclosure from happening. Here is how you can do it if foreclosure is in your future.
If your home will be foreclosed on within days or weeks, you may be able to stop it from happening if you file for bankruptcy. Once you file, a court order will be issued that contains an automatic stay. It puts the foreclosure process on hold while your bankruptcy is being processed, which can give you an additional 4-6 months where your house is protected.
Your mortgage lender may file a motion that will try to lift the automatic stay, essentially asking the court for permission to continue foreclosing on your house. There is a possibility that the lift will be granted, but it may still delay the foreclosure process by a couple of months. This time can be used to negotiate foreclosure alternatives.
Chapter 7 or Chapter 13 Bankruptcy
When filing for bankruptcy, you'll have two options available to you. Chapter 13 will work best if your house is already being foreclosed on, but you plan on eventually paying off the mortgage when your financial situation is sorted out. Once a payment plan is in place, your home could still be foreclosed on in the future if you are unable to make payments. The main advantage of Chapter 13 is that it will eliminate other debts, giving you more resources to put towards your mortgage.
Chapter 7 is for when you know that it is not possible to ever repay the loan. It can buy you some extra time in the home, and completely erase the remainder of the debt. You can also save up some additional funds while living in the home during the bankruptcy delay since you will not be making payments to your mortgage lender during that time. You'll lose the home, but won't have the debt associated with it afterwards.
Risks of Bankruptcy
Bankruptcy should only be used as a last resort because it can have an impact on assets you own other than your home. The bankruptcy will also be on your credit report for the near future, and may prevent you from getting another mortgage during that time.
If you have questions about foreclosure on your home, talk to a residential real estate lawyer. They will walk you through the options of what you can do, and help you make the best decision.Share
25 May 2015
Hello. My name is Susan James. Thank you for stopping by my website. I’m not an attorney, but I've used attorneys for a variety of reasons. One thing I have found is that it definitely pays to use an attorney who specializes in the field in which you are seeking advice or assistance. My husband and I have employed the services of a real estate attorney quite a few times. When we got married, I moved into the home that my husband owned. I also sold my house. We used an attorney to help with the sale of my house and to add me to the deed of my husband’s home. While it isn't always a legal requirement to use an attorney for these things, it is in your best interest. I’m going to share about when and why it’s a good idea to use a real estate attorney.