Bankruptcy filing will stop a foreclosure, but foreclosures do not automatically stop if you are working on loan modification with your mortgage company.
You may think you are safe while you are negotiating in good faith and doing everything your lender asks, only to learn that the lender is still moving forward with the foreclosure sale and time is running out to stop it!
- I hear from panicked homeowners who are told that their modification has not been approved, and their home is a few weeks, days or even hours away from being sold.
If your negotiations fall through, you need to have a back up plan.
- While you are trying to get your loan modified, you should save as much money as possible in case you have to look at other solutions to stop the foreclosure, especially if you are not making your mortgage payments in the process.
- Don’t use the money you are ‘saving’ by not paying your mortgage to pay off credit cards, medical bills, or other general debts without speaking to a lawyer.
- If you have some money saved up, it can only help you.
- You may be able to get a more affordable payment in bankruptcy if you can pay some of the missed payments, or you may be able to use those funds to settle past due payments. The funds you set aside can make the difference between keeping your house or not.
- Bankruptcy might be available to you, and if so will stop foreclosure if the modification falls through. You need to understand how it can affect you and if you are able to do what is required in bankruptcy to save your home.
- Chapter 13 can give you up to five years to catch up the missed payments.
- Chapter 7 can wipe out other debts, freeing you up to use your money to pay your mortgage. If you want to modify because you have other debts to pay, it might free up enough money so you can pay your mortgage, even without modification.
- If you are told that your foreclosure has been stopped, you need to get it in writing.
Another thing to keep in mind is that if you are having problems with your mortgage, you might also have problems with your other debts.
In fact, many people fall behind on their house payments in order to try to pay unsecured debts, such as loans, credit cards and medical bills.
- Bankruptcy can reduce some/all of your unsecured debts or help write them off completely, which can free up funds to pay towards your house payments and other needs.
Seek the advice of an experienced bankruptcy attorney as soon as you can, just so you know if bankruptcy can help you or not if the modification falls through.
You may also find the lawyer is able to help you find a better option to deal with your debts, either by filing one of the different kinds of bankruptcy cases , or other methods such as by a debt management, credit counseling program, or debt settlement.
It is good to know what bankruptcy can do, and if it is a good option.
It makes sense to know all your options while you are making these important decisions so that you can pick the best option for you…before you run out of time.
see also:
Consider Non Bankruptcy Alternatives For Debts and Many People Keep Their Homes When They File For Bankruptcy by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer
