Many people try to save their homes from foreclosure using the bankruptcy processes. Many times, bankruptcy is the only way to save your home and stop a foreclosure. Looking at all the ways to try and save your home is what I believe is the best way to help someone to make the best choices regarding keeping their home.
- HOW CAN YOU KNOW IF FILING BANKRUPTCY OR FOLLOWING SOME OTHER COURSE OF ACTION IS BEST FOR YOU?
The first step in the process is determining what are all of your options. This begins by looking at the value of the property and whether you owe so much that the property will never be worth keeping. You do not want to keep the flu, a cold sore or any other illness that will keep you from achieving your true goals which are living a happy and fulfilling life.
A Bankruptcy case will stop a foreclosure so long as the final sale has not occurred. Stopping a foreclosure is not the same as keeping the foreclosure stopped. Once the Bankruptcy case is filed, the creditor is not going to stand idly by while the creditor receives nothing. A motion to modify the Automatic Stay or what is commonly called a 362 action will be filed. The creditor will usually win this motion and the debtor must begin paying adequate protection payments.
This is not a problem if the debtor has the income to begin making both the regular mortgage payment and the amounts necessary to cure, over a reasonable period of time, the missed payments so the debtor is current when all the payments are made under the plan.
The payments will, however, be required to be paid beginning 30 days or so after the bankruptcy case is filed. If your income is insufficient to make the payments, your bankruptcy case will be over before you can even get started.
- DEFENDING AND FIGHTING THE FORECLOSURE
When you receive the foreclosure papers in South Carolina, you have 30 days to file an answer. If you file an answer, then the foreclosure case will be delayed. It is not unusual for a South Carolina foreclosure to take nine months to a year if the case is contested.
During the processes which are called discovery, you may find out that the lender has committed violations in the handling of your loan. This does not happen in every loan, but, it happens often enough that you may be able to use what is discovered to negotiate a better deal with the lender.
- LOAN MODIFICATION
It is common to hear about how many times a homeowner has applied for a loan modification. Oftentimes, if the lender has to choose which loan to modify, it may choose to modify the fighting loan and finish the foreclosure on the borrower who does not fight.
- TRYING TO BORROW YOUR WAY OUT OF DEBT
If you cannot afford to pay the debt that you have, borrowing for a new loan which will have a higher interest rate and often higher payments. After all, your credit is already bad since you are in or facing foreclosure soon. Why would anyone lend money to you without charging you a lot of money.
- SO WHAT DOES ALL THIS MEAN TO YOU?
My client came to me facing a foreclosure that she had been served with so that she only had a short time to act. My client had lost her job and was working at a part-time job that did not pay her enough to feed herself and pay the mortgage as it came due.
First my client and I reviewed options regarding bankruptcy. Without income to make the mortgage payment, filing a bankruptcy was not going to help to stop the foreclosure for long.
My client had applied for a loan modification, but, she had been turned down by the lender several times.
No one would lend her money to refinance the mortgage.
- WHAT WE DID
We filed an answer and delayed the foreclosure. We fought and found nothing that would help force the lender to modify the loan, to get the money owed satisfied or to somehow manage to rework the loan.
- ALL WAS NOT LOST
During this time, the client found a job that would allow a payment on her mortgage. The rules on loan modification got better and easier to get approved. One day, the lender offered to look at a loan modification and my client re-approved still another time.
The modification was approved, the debtor is making her new mortgage payment and she is very happy with the outcome. Yes, it took over a year to achieve the desired result, but, my client got to where she wanted and needed to go.