If you’ve been dealt a hard blow recently, namely the threat of foreclosure, there’s no reason why you have to accept it as your fate. Many people feel that foreclosure on top of unbearable debt is adding insult to injury. However, you can use these two unfortunate situations to your advantage!
You can get rid of your debt and delay or prevent foreclosure in one move. While this may sound too good to be true, it really isn’t. There are legal methods that your bankruptcy attorney can assist with to help ensure that you keep the home you worked so hard to obtain and maintain. Here is what you need to know…
The Bankruptcy Foreclosure Connection
Many people who face foreclosure are struggling with debt in some way. After all, if you aren’t paying your mortgage in full and on time, there are probably other debts that aren’t being paid. However, when you file for bankruptcy, not only will you get rid of these cumbersome debts, but you’ll also delay foreclosure!
Here’s how it works: by filing for bankruptcy in Florida, the courts officially prevent any creditors from contacting you through an automatic stay – that includes your mortgage holder! While your mortgage holder is prevented from collecting, you get to remain in your house, preventing the foreclosure process. If you file for Chapter 13 (a form of debt restructuring), then you might even be able to get your finances back in shape so you can continue making payments on your mortgage.
Many people have found that with the protection offered them through Chapter 13 bankruptcy, they have the time and relief they need to make payments once more on their home. Chapter 13 also restructures the debt in a way that a person can pay back all or part of their debts, including their mortgage, as part of a court-approved payment plan.
The Effect of Chapter 7 Bankruptcy on Foreclosure
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is different. If you need to file Chapter 7 and you are worried about losing your home, you will be relieved to learn that most filers keep their homes as long as they are current on their mortgages. Very few lose their homes when there is significant equity in the property that can be used by the trustee to pay unsecured debts.
If you are not current on your mortgage and you file Chapter 7 and you are wondering how to stop foreclosure, this is the time in which foreclosure may only be delayed. That doesn’t mean that you can’t save your home since the automatic stay goes into effect as soon as the bankruptcy petition is filed with the court by your bankruptcy lawyer.
You can take advantage of the stay period because it means that creditors, including your bank, can’t attempt to collect on the debt that is owed. This is a time when many homeowners use their freed up income to catch up on their mortgage payments. It may also be possible to work something out with the mortgage lender.
If the desire is to work out a plan with the lender, loan modification is sometimes the answer. If approved for loan modification, the interest rate, principal payment, and mortgage payment are all reduced. However, the arrears tend to be added to the new balance so the loan is no longer considered in default. To make this method work, the lender will require that you provide them with sufficient financial documentation because the requirements may be strict.
Stopping Foreclosure without Filing Bankruptcy
It is possible to avoid foreclosure without filing bankruptcy in Florida if potential foreclosure is the only reason why you are considering filing. However, this possibility lies on the shoulders of the mortgage lender. They may or may not choose to modify. If they choose not to, bankruptcy may be the only option that you have.
Even if you are not sure whether or not you are going to file bankruptcy, a Florida bankruptcy attorney can advise you on what your steps should be. You can also receive the legal guidance you need to effectively negotiate with the bank. However, keep in mind that even if you avoid foreclosure without filing bankruptcy, there is a reason why the payments fell behind in the first place. Unless your financial circumstances have changed for the better, it may be worth exploring bankruptcy as the vehicle in which you prevent the mortgage from falling into arrears again.
Stop Foreclosure by Working With a Bankruptcy Lawyer in Florida
Our law firm has the knowledge and experience to help you pursue debt relief and stop foreclosure efforts. Contact our attorneys at Debt Relief Legal Group to schedule a free initial consultation. Call us at 1-800.DEBT.RELIEF (332.8735) or send us an e-mail to get started today.