A Guide to Strategies to Stop Foreclosure
The foreclosure process can be overwhelming and stressful, but our Georgia bankruptcy lawyers provide hope for those facing foreclosure.
What Is Foreclosure?
During a foreclosure, a mortgage lender (usually a bank or mortgage company) determines that you are behind on your mortgage payments to an extent that it wants to take possession of your home and sell it to recoup its losses.
In essence, the lender takes back the property after the homeowner fails to make the required monthly payments.
Sometimes foreclosure is handled by courts; sometimes it is not. Instead, it may go through non-judicial foreclosure.
Lenders will usually sell the property through legal means, such as a sheriff’s sale, so the funds gained can be used to repay the remaining balance of the loan. The balance may be owed to you if the price paid is higher than your debt.
Foreclosure procedures vary by state. In some states, lenders must initiate a judicial foreclosure, while in other states, non-judicial foreclosures are sufficient.
How Does the Foreclosure Process Work?
In most cases, foreclosure is possible when you are in default on your loan. This can occur after missing multiple mortgage payments.
During this time, the lender begins to view your property as a possible foreclosure, but it cannot legally begin the foreclosure process just yet.
Why Should You Stop Foreclosure Immediately?
Foreclosure is a very stressful process, and it can be even more stressful if you’re not expecting it. Unfortunately, many people facing foreclosure don’t know how to stop it or where to start.
Here are a few reasons why its important to cease foreclosure:
Save Your Credit Score – A foreclosure can stay on your credit report for up to seven years. That means that even after the foreclosure is over, your score will still be affected. If you want to buy another house or refinance in the future, this could cause problems because lenders see that as a high risk.
Keep the Property – Foreclosures can be messy and difficult to deal with, mainly if tenants living in the property have nowhere else to go after the foreclosure process is complete. In areas with few houses available for sale, this could mean that there aren’t many homes available for rent either, and tenants will end up homeless until they find another place.
Avoid Costly Legal Fees – The foreclosure process can be very costly, particularly if you have to go to court. However, you can avoid these fees altogether if you can agree with your lender before the foreclosure process begins.
Keep Your Personal Property – When a house is foreclosed on, everything in it becomes the lender’s property. If you have any personal belongings in the home, they could be sold to pay off the debt. If you’re able to stop the foreclosure, you can keep your belongings and avoid having to replace them.
Can You Stop a Foreclosure?
Yes, it is possible to stop or delay a foreclosure. However, it’s essential to act quickly. Consulting with an experienced attorney to understand your options can be really helpful.
The process of stopping a foreclosure can take many different forms, depending on the circumstances of each case. It depends on the lender, the borrower’s financial situation, and whether or not there are any other legal issues involved.
How to Avoid or Delay Foreclosure on My House
If you’re facing foreclosure, know that you have options.
Although a foreclosure will severely impact your credit score and credit history, there are ways to avoid it or mitigate the effects. With some quick action and planning, you can keep your home and get back on track financially.
1. Consider Filing for Bankruptcy
Filing for bankruptcy sets effects an automatic stay that stops the foreclosure process in its tracks. In effect, the stay prevents the bank from foreclosing on your home or otherwise trying to collect its debt. So, any foreclosure activity must be halted.
If the bank successfully files for relief from the stay, this avenue would delay the foreclosure by a couple of months, giving you an opportunity to explore other alternatives.
You might be able to avoid foreclosure and keep your home by filing Chapter 13 bankruptcy which allows you to restructure your debts. But, if you are already undergoing foreclosure, Chapter 7 bankruptcy is only a good way to delay the foreclosure process.
If filing for bankruptcy is one of your options, a Georgia bankruptcy attorney can help you understand whether Chapter 13 bankruptcy or Chapter 7 bankruptcy is better for your specific situation.
Choosing a bankruptcy lawyer with extensive experience in this field is key to succeeding with this option.
2. Consider a Short Sale
In a short sale, you sell your property for less than its current value. In a short sale, your lender usually forgives the remaining balance after receiving the proceeds from the sale.
This can be a good alternative for homeowners who have trouble making their monthly mortgage payments or would otherwise be facing foreclosure.
A short sale may be a strategy to prevent foreclosure and credit damage, but you will ultimately still lose your home. You’ll need to confirm with your lender if this is an option and get their permission.
3. Sell Your Home
Foreclosure can be avoided entirely if you sell your home for more than the amount you owe on your mortgage. But you must list and sell your home quickly.
However, if you owe more on your mortgage than the house is worth on the market, then a sale like this might not be possible.
4. Contact Your Lender
If you’re having trouble making your payments, like most pin the Covid-19 pandemic, reach out to your lender as soon as possible. You’ll want to explain why you fell behind on payments and what steps you’ll be taking to catch up on missed payments. If you can come up with a plan that works for both parties, it could mean staying in your home long-term. Your lender may grant you either a loan modification or a repayment plan.
- Loan Modification – A loan modification is an agreement that changes the terms of your current loan. Even if you aren’t qualified for a refinance, a loan modification can help make your monthly payments more affordable and allow you to remain current on the loan while remaining in your home.Examples of loan modification include extending the length of time on the loan to lower your monthly repayments or reducing your interest rate.
- Repayment Plan – Repayment plans are a way to repay a loan over an extended period of time, usually by making fixed monthly payments. In most cases, lenders will need proof of your income. This means that you have to prove how much money you early annually, and also show that you have been paying debts that you owe.
5. Get Help From HUD
When you’re facing difficulties making mortgage payments and are in danger of foreclosure, the US Department of Housing and Urban Development (HUD) may be able to assist.
HUD provides free or low-cost counseling to homeowners struggling to keep up with their mortgage payments, and they also offer several programs that can help you stay in your home.
Speak With a Foreclosure Defense Attorney
If you’re having trouble with foreclosure and cannot find anyone willing to work with you and help prevent it from happening, contact an attorney who works in real estate and bankruptcy law as soon as possible. It might be possible for you to explore your options and keep your home from being foreclosed on.