Note: This is not legal advice, but instead practical information that applies to the majority of cases. Please do not rely upon this information without a consultation with a qualified attorney. Prepared By Chris Rampley, Attorney at Law

Foreclosure can be stressful and terrifying.  Please read below to see how Bankruptcy can stop the foreclosure and even help you save your home!

When can mortgage companies foreclose?


Generally mortgage companies start the foreclosure process after the 3rd payment is issued.  Mortgage companies can also foreclose if the insurance lapses, the property taxes go unpaid for years, or if a structure is in danger of serious damage or loss. 

 

What is the foreclosure process like?


If your mortgage or deed sets out a special foreclosure process, then that process must be followed.  

 

However, If no process is set out, then the following process must be followed:


Step 1 - A foreclosure notice must be mailed by certified mail, return receipt requested to the borrower no later than 15 days prior to the date of the foreclosure sale. The 15 days begins the day the letter is postmarked.  The notice does not have to be received to be valid!  The notice must be mailed to the address given in writing from the borrower.  No waiver or release of the rights to this notice is valid if it was signed at the same time as the original documents.


Step 2 - The notice must be published in a newspaper of general circulation in the county where the sale will be held once a week for four (4) weeks proceeding the date of the foreclosure sale.


Step 3 - The sale is held by public auction on the first Tuesday of the month between 10:00 am and 4:00 p.m. at the courthouse in the county where the property is located.


Step 4 - After the foreclosure date the ex-homeowner may be evicted, though the mortgage company usually sends many letters asking for the ex-homeowner to move.


Step 5 - Though it is rare, the lender may sue to collect the deficiency on the mortgage.


Total time from the 3rd missed payment until foreclosure?  60-90 days.

 

This is all very scary! I dont want to lose my home!   What can I do?
 

Don't worry! Chapter 13 Bankruptcy is meant to save your home!  In fact, chapter 13 is sometimes called "The Home Savers Plan".  

 

Chapter 13 bankruptcy allows you to set up a repayment plan to pay off the past due payments, along with almost all of your other debts.  Keep in mind that you'll need sufficient income to pay BOTH your chapter 13 payment AND your current mortgage payments at the same time. So long as you make all of the required payments for the length of the repayment plan, you will avoid foreclosure and be able to stay in your home.  When you exit your case you will be caught up on your mortgage!

Is it too late to file Chapter 13 to stop the Foreclosure?

It is never too late until the house is actually sold on the courthouse steps!  Call us ASAP, though. The sooner we talk to you the sooner we can protect your house!

Will Chapter 7 ever help with a foreclosure?

Yes, Chapter 7 will stop the foreclosure for 2-3 months on average, wipe out the mortgage, and give you more time to move!  See the next question for more details.

What if I cant afford to keep my home? Will bankruptcy help me anyway?

Sometimes bankruptcy can't prevent the loss of your home, so you may start to think that a bankruptcy filing is pointless. There are other benefits to filing for bankruptcy besides the interplay between bankruptcy and foreclosure, however. Even if you can't keep your home, bankruptcy can help to shovel out from under mortgage debts and tax liability. This is an important first step towards getting back on your feet. Bankruptcy can also help you to put away money for the tough times ahead.