What to Do When You are Being Foreclosed - So You Want to Save Your Home
By Eugene S. Melchionne, Connecticut Bankruptcy Lawyer on Oct 21, 2007 in Connecticut
The marshal has come to your home and you have been served. Foreclosure is a process that takes some time, but is close to unstoppable. There are only three ways to stop a foreclosure in Connecticut - pay, pay or pay.
Wait, did I say three? Well the reality is that the only to stop a foreclosure is to pay what you owe. The only question is, how do I pay what I owe? There are three ways - refinance and roll what you owe on the arrearage into the new mortgage; reinstate through a state court supervised plan or file Chapter 13 in the U.S. Bankruptcy Court. Oh sure, the banks and mortgage comapnies will tell you that they offer a loan workout which is designed to get you current and avoid foreclosure, but don’t count on it.
Here’s why: The lender is going to require full disclosure of your finances. Nothing you have will be kept secret and it takes time to assemble all the information they want. While you are working with that department, the foreclosure department going full steam ahead. The two processes are independent and each department’s goals are met in how fast they move the file through the process. So it is very likely that a foreclosure case can go to judgment before you have satisfied the workout department’s request for information. You need to have an attorney watching the foreclosure case closely, stepping in to halt things while the workout process completes. Do not be surprised if the lender declines your request for a workout. The requirements are quite stringent.
Refinance? Two words: Forget it. The criteria for creditworthiness on new refinance loans is even more stringent than a workout. It is likely any offer to refinance will involve a higher interest than the current loan and correspondingly larger payments than you currently have. If you can pay now, how will you be able to pay later?
Chapter 13 lets you take that arrearage and spread the amount you owe out over a period of time up to 60 months or five years. When the numbers are totaled, you will find that even with the Court costs, Trustee charges and attorney’s fees, reinstatement through Chapter 13 is cheaper than a higher interest rate refinance or reinstatement over six months under a Superior Court plan.
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