Facing foreclosure can be one of the more troubling life events of adulthood, but it can happen to even the most financially savvy homeowners. ATTOM Data Solutions released its 2018 Foreclosure Market Report that shows bank repossessions, defaults and foreclosure filings are down 78% since the peak of the crash in 2010. Even though U.S. foreclosure activity has significantly dropped as of last year, that doesn’t mean that it isn’t still a very sobering reality for some.
So what can you do when you’ve run out of options? Are there any last-ditch solutions for property owners that are facing foreclosure and are unsure of how to stop it dead in its tracks? Fortunately, there may be some light at the end of the tunnel, but it is fraught with even more difficult decisions.
Chapter 13 to Stop Foreclosure
If you’re looking for a quick fix, bankruptcy doesn’t exactly resemble a sigh of relief, but it is an option. Unlike Chapter 7 bankruptcy, Chapter 13 protects individuals who can show proof that they can fulfill a practical payment plan right away. This is for people that still have a consistent income. Chapter 13 reorganizes your debt and halts all collection efforts against you, essentially saving your home.
Often referred to as the “wage earner’s plan,” Chapter 13 bankruptcy is a popular choice for homeowners that are buried under debt but still have a steady income. Unlike Chapter 7, where eligible assets are surrendered and sold off to pay debts, Chapter 13 opens the door for a repayment plan.
The Benefits of Filing for Chapter 13 Bankruptcy Protection, Including:
- All foreclosure proceedings will stop immediately
- An automatic stay will be issued. This will halt all collection efforts against you
- Any co-signers will also be protected and collections will cease on their end
- Your possessions and property will be protected from a forced estate sale
- You will have ample time to draft a payment plan with the help of a trustee
- Significant debt may be discharged or eliminated once the bankruptcy is completed
To Qualify for Chapter 13 Bankruptcy You Must Meet the Following Guidelines:
- Undergo credit counseling before filing
- Have reliable income that meets monthly living income
- Have less than $1,081,400 in secured debt (debt that is tied to assets or property as collateral) and $360,475 in unsecured debt (debt not tied to any collateral)
- You cannot be a corporation, stockbroker, or commodity broker
- Not have received a discharge in a Chapter 7, 11 or 12 in the past four years, or another Chapter 13 in the past two years.
Emergency bankruptcy, otherwise known as a skeleton bankruptcy, is an especially useful tactic for individuals that are trying to avoid a foreclosure in the final hour. This process allows debtors to enact an automatic stay by completing and submitting online forms. Once the stay is in effect, all collection efforts are halted and the debtor has 14 days to complete the remaining bankruptcy filings.
Filing for bankruptcy comes with a great deal of paperwork and isn’t an overnight ordeal. If the debtor doesn’t fill out and submit the remainder of the necessary documents within that two week timeframe, the petition for bankruptcy will be dismissed. Those attempting to file for an emergency bankruptcy may have to take a credit counseling course along with submitting the necessary online forms.
The window of time that a bank has to foreclose on a property varies from state to state. In California, lenders must give ample notice to homeowners before they set a foreclosure sale date. If you have received a foreclosure notice, don’t sit on it. Call your bank or lender right away to avoid foreclosure. Once the lender moves to sell your property, bankruptcy won’t work as a preventative measure.
Remember, if you have fallen behind on mortgage payments, the last thing you want to do is bury your head in the sand. Bankruptcy isn’t the end of the world, even though it may feel like that at the time. Filing for bankruptcy actually has many benefits depending on the size of the debt being owed. Most lenders and banks want to work with homeowners to find solutions.
If bankruptcy seems like a viable option for you, it is best to contact a professional bankruptcy attorney to understand your options. OakTree Law has a staff of experienced bankruptcy lawyers that are poised and ready to help you regain your financial footing. Call OakTree Law today: 888.342.3237