Your financial circumstances may have changed to the point where you find yourself struggling to keep up with your monthly mortgage payments. One missed mortgage payment may not lead to any harm. However, your mortgage lender may be prompted to place a foreclosure action against you and your home after repeat offenses. With such an action, they may seize and force the sale of your home, in an attempt to recover the balance of your loan. You may feel helpless when your mortgage lender takes matters into their own hands like this. But you may effectively respond with submitting a bankruptcy petition. Continue reading to learn how a bankruptcy filing can stop the foreclosure of your home and how an experienced Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you explore alternative resolutions, as well.
How can a bankruptcy filing stop the foreclosure of my home?
After you submit your bankruptcy petition, one of the first things that may happen is an automatic stay being enforced. An automatic stay is an injunction imposed against certain creditors who start or continue taking action against you and your property. So specifically for your case, this may prevent your mortgage lender from placing a foreclosure action against you and your home. Of note, an automatic stay may apply regardless of whether you filed for Chapter 7 or Chapter 13 bankruptcy.
You must understand, though, that your Chapter 7 bankruptcy may only temporarily delay the foreclosure of your home. This is because this bankruptcy type does not have a resolution for making up for your missed mortgage payments. Rather, you may need to sell your home to pay off the debts that could not be discharged in your bankruptcy proceedings.
On the other hand, your Chapter 13 bankruptcy may save your home from foreclosure altogether. This is because your three- to five-year repayment plan may allow you to reduce your monthly payments, interest rate, or mortgage principal, extend your mortgage by many years, and overall make up for your missed payments.
What are alternative foreclosure prevention tactics?
Understandably so, you may find a bankruptcy declaration to be too drastic of a measure for dealing with your missed mortgage payments. This is when you may turn to alternative foreclosure prevention tactics. Such tactics read as follows:
- You may negotiate a loan modification or refinancing plan with your mortgage lender.
- You may negotiate a forbearance (i.e., delaying a foreclosure) with your mortgage lender.
- You may negotiate a short sale (i.e., selling for less than what you owe) with your mortgage lender.
- You may negotiate to surrender your property in full satisfaction with your mortgage lender (i.e., they have no further claims against you).
There is no better time to act than now. So please reach out to a skilled Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center at your earliest possible convenience.
