Foreclosure is the process through which a mortgage lender repossesses the homes of homeowners who have defaulted on their payments. Generally, the lender takes possession of the property, then sells the property. Once a homeowner has defaulted, the lender may foreclose at any time. Many homeowners who have gotten behind on their mortgages are too worried about losing their homes to act, which is the worst possible thing to do. In many cases, homeowners have options to avoid foreclosure, including filing for bankruptcy, which can certainly delay foreclosure and, in some cases, allow a homeowner to keep their home.
Whenever a person files for bankruptcy, she comes under the protection of the automatic stay, which stops, any collection activity against the debtor while his or her bankruptcy is pending. The kinds of collection activities that cannot continue include phone calls, letters, lawsuits, and importantly, foreclosure. This additional time can give homeowners the chance to make arrangements with their lenders or come up with enough money become current on their mortgage payments. Often, this added period is a good time to discuss the possibility of loan modification with your bank and your attorney.
Chapter 13 bankruptcy is a type of bankruptcy in which the person’s debts are restructured in a way that allows him to keep his property while paying off debts over a period of three to five years. If a homeowner has fallen behind on his or her payment, filing for Chapter 13 can allow him to repay the past due payments through the course of the repayment plan. As long as homeowners in Chapter 13 bankruptcy stay current on their mortgage payments, they are able to keep their homes.
In some cases, homeowners have taken out second mortgages on their homes. Chapter 13 can be used to help, homeowners can lower their monthly housing payments, often allowing them to stay in their homes. It can also help, in some cases, get rid of the second mortgage all together.
People who are in danger of losing their homes due to foreclosure should contact an attorney immediately. In some cases, filing for bankruptcy may be able to help an individual who is having difficulty making his or her mortgage keep his or her home. To schedule a consultation with Michigan bankruptcy lawyer Karen E. Evangelista, call our office today at 248-652-7990.