You purchased your house at the right time and for a good price – considering the market. Your income at the time was stable, and while the mortgage payment was slightly over what your budget allows, you have been pushing through.
When a financial disaster strikes (like losing your job, or becoming ill), that mortgage payment becomes a constant reminder of what you cannot afford, and now you are a few payments behind. You have received the letters, and your mortgage company is threatening you with a foreclosure.
Breaking a payment contract, such as a mortgage, not only results in losing your home but civil court judgments. This is because the mortgage company will sell your home at auction, and if the auction yields less than you owe, you are still responsible for that remaining balance.
Can You Stop a Foreclosure or Sale?
Sometimes, mortgage companies are willing to work with consumers. If the relationship between you and your mortgage servicer is not broken, ask about a loan modification.
If you have good credit and collateral, you could receive a modification. However, if the financial despair you are in already destroyed your credit, filing for bankruptcy is your next option.
In some instances, bankruptcy could prevent the foreclosure from continuing, save your home, and allow you the time you need to catch up – or at least prevent you from owing money on a house you no longer reside in.
Filing for Bankruptcy and Saving Your Home
Bankruptcy is a last resort, but the only way to stop a foreclosure effectively. When you file for bankruptcy, you receive an automatic stay. The automatic stay requires all creditors, including your lending agency, from attempting any further collections or actions (such as judgments, foreclosure, and repossession).
Unfortunately, the foreclosure can continue if the lender receives permission from the court to do so. This typically occurs when the foreclosure is already well into the process, and the lender has begun the foreclosure.
You have two options for bankruptcy to save your home:
- Chapter 7 – Chapter 7 bankruptcy is essentially a start-over type of bankruptcy. It buys you time and helps you save up money to pay back the past due payments, but may not save your home.
- Chapter 13 – Chapter 13 bankruptcy is best when you want to save your home, because it is a repayment plan you establish with the courts, and the courts force creditors to follow this plan. You can restructure debts, and you may be able to reduce your mortgage payments, and you continue payments for three to five years – until the plan is satisfied.
Hiring an Attorney is the Best Way to Save Your Home
If you have fallen behind on mortgage payments and other debts, and you are considering bankruptcy, speak with a bankruptcy attorney. Every financial situation is different. Therefore, an attorney must review your financial situation, how far your foreclosure has progressed, and then help you decide which option is best for you.
To explore your options for bankruptcy, meet with an attorney from Hames, Anderson, Whitlow & O’Leary today.
We offer confidential, no-obligation consultations. Schedule yours at 509-586-7797 or request more information about filing for bankruptcy online.