Stop Foreclosure and Cure Mortgage Default.
You can stop foreclosure and save your home through bankruptcy as long as the Sheriff’s Sale has NOT taken place yet. Once the Sheriff’s Sale has taken place, the creditor has the upper hand and the homeowner cannot force the creditor into a chapter 13 repayment plan. However, if the bankruptcy is filed in time to stop the Sheriff’s Sale, then the debtor can force the creditor to accept the arrearage amount over a period of time ranging between three and five years.
Cure Mortgage Default
You do not have to wait to file bankruptcy until a foreclosure lawsuit is filed and a Sheriff’s Sale is looming. Once you have fallen behind on mortgage payments you can file a chapter 13 bankruptcy to pay back the arrearages under better terms than the bank would be willing to offer.
Loan modifications are another option for clients who are behind on they payments or are about to go into default on their loans. However, the loan modification is complicated and, sadly, takes a very long time. We can help clients with the loan modification inside or outside of bankruptcy.
Usually, it will be of an advantage go clients to file a chapter 13 bankruptcy and have us assist them in the loan modification process. In this way, the creditors are prevented from moving forward with foreclosure or collections actions, and the clients have sufficient time to work on their loan modifications.
Stripping Mortgages and Liens
Another significant advantage to filing a chapter 13 bankruptcy is that a home owner may be able to get rid of the second (or third) mortgage on their home, if the value of the home was equal to or less than the amount of the first mortgage on the home. For example, if the home is worth $100,000.00, and the first mortgage is $100,001.00, and the second mortgage is $10,000.00, the second mortgage is completely unsecured and therefore can be treated that way in a chapter 13 plan. The second mortgage holder would be treated the same way as all of the other unsecured creditors, such as credit cards. The second mortgage lien, however, would only be removed once the debtor successfully completes the chapter 13 and receives a discharge.
You can surrender property that you do not want, including real estate, in a Chapter 7 or Chapter 13 bankruptcy. In that case, the creditor will eventually proceed with the foreclosure process but you will not be responsible for any deficiency that results and you can remain in the house essentially rent free until the foreclosure is complete and the Sheriff’s Sale takes place. This could be a significant benefit as foreclosures can take months to complete.
If you are in a Chapter 13 bankruptcy, then any deficiency balance would be treated the same as any other unsecured creditor.
The bankruptcy process does not transfer the title to the property from your name to that of a creditor. Transfer of title has to be done through the foreclosure process or by agreement between you and the creditor, usually referred to as a deed in lieu of foreclosure. This is a matter that is handled outside bankruptcy.
If you are not behind on your payments on your real estate and you do not want to surrender the real estate, then you can reaffirm on it. This is a process in which you and the creditor enter into an agreement through the bankruptcy process called a reaffirmation that re-obligates you to pay the mortgage after your discharge on the same terms and conditions as previously or upon such terms and conditions as you and the creditor agree to.
You are not obligated to sign a reaffirmation agreement.
Serving Southwest Ohio clients in Cincinnati, Mason, Lebanon, West Chester, Montgomery, Hamilton, Middletown, Batavia, Wilmington and surrounding areas.
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