Avoiding Foreclosure Through Bankruptcy
Your home is much more than a piece of real estate. Your home is a place of great emotional attachment. Your home is the site of some of your fondest memories. If you have fallen behind on your mortgage payments, avoiding foreclosure may still be possible. It is time to look at all of your options. One option may be bankruptcy. The lawyers and staff of Minnillo Law Group have helped homeowners throughout the Cincinnati area save their homes and avoid foreclosure through the bankruptcy process.
Debt Relief For Homeowners
In the short term, when you file for bankruptcy, the automatic stay is put in place immediately. The automatic stay prevents all of your creditors from taking any collection actions, including foreclosure. Therefore, filing bankruptcy stops a foreclosure in its tracks. This relief may only be temporary, however. Make sure you understand the different types of bankruptcy filings if avoiding foreclosure is your main goal.
Chapter 7 bankruptcy
If you file for Chapter 7 bankruptcy, your mortgage lender can ask the bankruptcy trustee to lift the automatic stay and reinitiate foreclosure proceedings. Therefore, the main advantage of a Chapter 7 bankruptcy is to buy time to work out an arrangement with your mortgage lender.
For people who are unable to keep their home and get current with payments in a Chapter 7 bankruptcy, they may choose a short sale to prevent the foreclosure process. In a short sale, liens against the property will be lifted and the property will be sold for a lesser amount than what is owed on the debt.
A short sale does not necessarily mean that all deficiencies will be wiped away with the sale of the real estate, so it is important to discuss this option with the short sale attorneys at our firm before proceeding. We will provide knowledgeable advice and help you get the information you need to make a smart choice.
Chapter 13 bankruptcy
Generally speaking, Chapter 13 offers homeowners a more permanent solution. In a Chapter 13 bankruptcy, you receive a three- to five-year repayment plan. This places an automatic stay on foreclosure, repossession, garnishment and collection lawsuits. It also stops the accumulation of interest fees. You make affordable monthly payments, and at the end of the repayment period, your remaining dischargeable unsecured debts are discharged. This can include secondary mortgages or home equity loans or lines of credit.
We take an individualized look at your assets and debts to formulate a plan for your long-term financial benefit. For example, if your home is “oversecured” (your mortgage balance exceeds the value of your home), our bankruptcy attorneys have been successful in proposing Chapter 13 plans which provide for a reduction of the mortgage principal—down to the value of the home for people with certain mortgages with very specific language. This process, called “cram down” or “bifurcation”, can save people thousands of dollars over the life of their mortgage and allow them to keep their home.
"Mortgage stripping" second and subsequent mortgages
A Chapter 13 can strip a second or third mortgage and allow the homeowner to pay mere pennies for every dollar owed. Not only does the debt disappear after the discharge is ordered, but the resulting higher cash flow also makes it much easier for these homeowners to cover their first mortgage, as well as their other debt payments and living expenses.
If your second or third home is “underwater” (meaning that the value of your home is less than the amount owed on your first mortgage), you can strip a secondary mortgage. However, you cannot strip a secondary mortgage if the value of your house exceeds the amount of the debt.
Our bankruptcy attorneys understand the rules regarding mortgage stripping, and how to help our clients obtain maximum debt relief. We can help you understand your options and make decisions that are right for you.
Mortgage and Home Loan Motifications
Many people fear the idea of foreclosure and seek all other alternatives to prevent a foreclosure from happening. One option is a mortgage modification. Unfortunately, the process for applying for a modification is typically lengthy and the likelihood of getting approved for a modification is not very high. In most instances, bankruptcy is the best option for individuals. By working with the experienced bankruptcy lawyers at our firm, you will fully understand all of your options.
We are a law firm and a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.