What is foreclosure? Foreclosure is the remedy for the lien holder (mortgage company) to take back possession of a mortgaged property when the borrower falls behind in their mortgage payments. In Florida, the foreclosure process is a judicial process which will take months to complete as the case works through the courts. It is a state court remedy to clear the title so that property can sold once again free and clear of any liens and encumbrances. Absent a modification or reinstatement of the loan by paying all the amounts due and owing, the foreclosure will progress until the property is auctioned off. The filing for a bankruptcy will stop the foreclosure process in its tracks and will allow borrower an opportunity to reorganize the debt and save the property.

Bankruptcy will STOP foreclosure by HOA’s
( Homeowners Associations)
and Tax Deed Sales

Sometimes a homeowner faces foreclosure due to unpaid property taxes or homeowner association fees and dues. A chapter 13 bankruptcy will not only stop the foreclosure process but it will create an opportunity to repay the amounts owed through the provisions of the chapter 13 reorganization plan.

Automatic Stay stops Foreclosure and Repossession

Immediately upon filing a bankruptcy case, an automatic stay is imposed. This stay acts as an injunction against any type of collection by creditors. Chapter 7 and chapter 13 bankruptcy come with an “automatic stay” which can prevent creditor’s attempts to repossess your property. The stay is used to stop foreclosure and the repossession of vehicles. The automatic stay also prevents creditors from engaging in collection activities, like intrusive calls and letters or garnishing bank accounts and wages.

Saving your home through bankruptcy

You have OPTIONS If saving your home is a priority for you in these trying times. You have several courses of action that are available to you and laws in place to protect your property and livelihood – and that includes your home.

Modify Your Loan: The Bankruptcy Court initiated a loan modification program after the mortgage crisis of 2008. Under this program, the debtor seeks a court order which will tell the lender that they must participate in the modification process in good faith. Documents are uploaded via a secure portal and an agreed upon mediator oversees the
process and files a report to the court. Gone are the days when documents had to be resubmitted over and over. This program has streamlined the process and often, a decision is reached within 90 days.

 

Repayment Option

Sometimes a borrower does not fit into the loan modification system but they still have the option to save the home by paying the ongoing monthly payment and curing the arrearages under the provisions of the chapter 13 plan.

Surrender

While we spend a lot of time discussing how to keep your home, sometimes the best option is to let the property go back to the bank. A bankruptcy will keep the borrower from facing any financial liability on the mortgage debt and any resulting deficiency, furthermore, if the debt is cancelled and a 1099C is issued to the IRS the timely filed bankruptcy will keep the borrower from owing any tax liability on the forgiven debt.
Time is of the essence, as each day passes the amount that you owe and will need to repay only grows larger, that is why the sooner you file and get the situation under control the greater chances of success.

If you are near bankruptcy, upside down in debt, being hounded by creditors, or facing foreclosure, call Eileen Dolaghan to set up a free consultation so she can help you find the best solution to your financial problems at 904-354-4935.