The foreclosure process is stressful and overwhelming, which is why so many owners tend to ignore it and just let their homes foreclose and sell at the sheriff’s sale. What they often don’t realize is there are still ways to save your home before it sells. This begins with contacting a foreclosure defense attorney. They will likely suggest modifying the mortgage or filing a bankruptcy.
Modifying your mortgage might be more amenable to most than filing for bankruptcy. A modification is only available to those who qualify with their lender. The modification can vary depending on who your servicer is but can consist of things such as extending the duration of your loan or lowering the interest rate, both of which can lower your monthly payments. Before the modification is approved you enter a trial period. During this period, the loan servicer will want to make sure you can abide by the modified payments and will want you to make trial payments. You would have to make all the trial payments successfully and on time in order for the servicer to actually approve your mortgage modification. This trial period usually lasts for three months in a lot of cases but will vary depending on who your servicer is.
Bankruptcy is another option that can be pursued if you want to try and halt foreclosure and save your home. Upon filing for bankruptcy an automatic stay will go into effect. This stay will stop the bank from foreclosing on your property or collecting on the debt it is owed. Because of this, the foreclosure process is halted during your bankruptcy proceedings. Filing a Chapter 13 bankruptcy can put you in a position to save your home by allowing you to restructure your debts, with some debts being partially paid off and others having to be paid off in full. With this plan, you may be able to save your home by paying off any delinquent mortgage payments during your repayment plan.
On the other hand, filing a Chapter 7 Bankruptcy will halt your foreclosure proceedings but it is less likely to save your home. At the very least it will provide you some time to live in the home without having to make mortgage payments. You can take the money that you would be paying towards the mortgage during your bankruptcy and start saving it for a rental. You also may be able to work with the bank during this time to come up with a plan to avoid foreclosure.
Something to be aware of when filing a bankruptcy is that during this process the bank can attempt to have the automatic stay lifted by filing a motion to continue the foreclosure with the court.
At the end of the day having a foreclosure filed against you does not necessarily mean that your home is lost. There are ways to save your home, but consulting with an experienced foreclosure attorney will give you a much better shot than trying to solve it on your own.
* This post is for educational purposes and should not be interpreted as legal advice.
Christopher T. Campbell is an experienced New Jersey attorney focused on assisting homeowners with asset and surplus fund recovery. If you have questions regarding asset recovery, a foreclosure, or a sheriff sale, we encourage you to contact us today.