If you are facing the potential of a foreclosure, call our office to speak with a bankruptcy attorney immediately. Time is not on your side, so you need to take proper legal action before it is too late to help. When it comes to dealing with foreclosure, a bankruptcy attorney will keep your best interest and assets in mind.
What to do with a home mortgage
The mortgage is a complicated aspect of bankruptcy because a house facing foreclosure does not have the simplicity of unsecured debt. The deed of trust on your property, gives lenders specific rights. This includes the right to take back the property if you do not make payments. Lenders will do what they can to protect their rights. However, filing bankruptcy will give you options.
Chapter 7 will stay foreclosure proceedings
Chapter 7 bankruptcy forces an immediate stay on foreclosure proceedings. While your Chapter 7 bankruptcy is currently being processed, the lender cannot foreclose. The delay gives you the opportunity to negotiate with lenders. If you want to continue living in the home, there may be the option to negotiate with the lender and get them to agree to a reduction in your monthly payment.
Other options include requesting lenders to add anything in arrears to the end of your loan. This could extend the term of your loan. However, it will make you current and you wont have to worry about the arrears. In some cases, this is all that is necessary for a family to catch up on their mortgage payments and begin making them as agreed. So long as you do so, the lender will have no need to attempt for foreclosure in the future.
We can help keep you on track
If you file for bankruptcy and then begin to fall behind on your payments, the lender has the option to foreclosure again. This makes it important to assess your financial situation and the likelihood of being able to make payments before deciding to reaffirm your loan; something we will help you to do as your bankruptcy attorney.
Another benefit to filing for Chapter 7 is that it could get rid of your unsecured debt and free up funds to make your monthly mortgage payment. Before filing for bankruptcy, we will pour through your income, assets, and debt. This will allow us to make recommendations regarding the type of bankruptcy you should file and whether it is wise for you to reaffirm your mortgage or to simply let it go. In any case, filing for bankruptcy will give you more options and help you to reach a better financial place.
Taxes, Foreclosure and Bankruptcy
Another lesser known benefit of filing for a Chapter 7 is that if your home has been foreclosed on or is in the process of being, it can prevent you from needing to pay taxes on any deficiencies. The IRS may tax you for any “forgiven debt.” Therefore, could be an extremely large benefit. A bankruptcy attorney can go over this with you.
NOTE: This is for informational purposes only and does not constitute legal advice