Believe it or not, filing for bankruptcy can help you stop foreclosure.
That may sound odd, and you may be wondering right about now how that would work. Well, it depends on which type of bankruptcy you choose, and how it applies in your case. Needless to say, you’ll need professional help to apply this option in the most effective way. We’d be happy to help, and in this post, we’ll show you just how easy it is to least gain a temporary reprieve. To learn more, contact Andrade Law Office LLC today.
How Does Foreclosure Work?
Simply put, a foreclosure is a legal action where your home’s lender begins the process of repossessing the property because you’ve failed to make your promised mortgage payments. Lenders rarely take such action before you miss more than three or four payments, because foreclosures are a messy business. Furthermore, the lender has to follow state law, which may not be to their favor.
Since it takes a while to complete the foreclosure, you’ll have several months to look for a way to catch up on your payments once the lender notifies you that foreclosure procedures have begun. In Ohio, foreclosures are judicial, which means they go through the court system. This may also give you a little more time.
If you fail to stop foreclosure on your home, the lender will sell it at auction. They will then apply any proceeds from the sale toward the mortgage balance — but you won’t get any monies earned in excess if it sells for more than you owe. If the proceeds are less than the mortgage balance, the lender will expect you to pay the difference. You will also suffer a huge tax burden. Anything you can do to avoid all this is clearly to your benefit.
How Can Chapter 7 and Chapter 13 Stop Foreclosure?
Both Chapter 7 and Chapter 13 bankruptcies usually delay foreclosure for months, because all personal bankruptcies result in the immediate application of a legal instrument called an “automatic stay.” This tells all your creditors to back off until the court can clarify your financial and legal status.
This works even if your lender has already scheduled your home for sale, making it impossible for them to sell it while the bankruptcy is pending. This can give you up to four months. However, you can count on the lender finding a way to lift the stay, sometimes much sooner than you expect. All it takes is something called “a motion to lift the automatic stay” and a sympathetic judge.
A Chapter 13 Bankruptcy Might Work Better For You
Chapter 13 bankruptcies are different from Chapter 7 bankruptcies, in that they can help you stay in your home indefinitely. In a Chapter 13 bankruptcy, few debts are complete discharged. Instead, the court restructures your debt load so you can pay them off over a longer period of time. As long as you pay your mortgage every month, you get to keep your home.
You may also be able to take advantage of something called “loan stripping”. If you have a second or third mortgage, and your home has dropped in value so that you no longer have equity, the court may categorize those mortgages as unsecured debt — which will then become the last priority in your payment plan. You may never even have to repay it. However, if your home value has risen, you can still protect your house to some extent using your state homestead exemption.
Let Us Help You Stop Foreclosure Closure in Ohio
Andrade Law Office LLC specializes in helping Ohio residents file bankruptcy and stop home foreclosures. When you receive notice of foreclosure from your lender, contact us for free consultation.
Don’t just give up. Call today. We can help you use the benefits of bankruptcy so you can stop foreclosure on your house before it’s too late.