One Way to Earn Foreclosure Protection – File for Bankruptcy
The prospect of losing your home to the bank or your mortgage lender is a terrifying one for many homeowners, especially those who don’t know how to stop foreclosure. When homeowners are facing foreclosure and they have a lot of other debt, filing for bankruptcy protection may be the only way to go because of a statutory protection known as the automatic stay. As a result, it works out to be foreclosure protection.
The automatic stay acts as an injunction against any attempts by creditors – including mortgage lenders – to collect debts or enforce a lien. In most cases, the foreclosure proceedings are included within the scope of that automatic stay. It’s important to understand that an automatic stay is a temporary stop to foreclosure action. An automatic stay does not apply if:
· The homeowner initially files under Chapter 7 bankruptcy
· The court rules that your income is too high to qualify under the means test, and
· The homeowner then re-files under Chapter 13 bankruptcy rules
As you may have guessed, filing for bankruptcy as a means of foreclosure protection is a complicated process. It’s not one that a homeowner should try to manage on their own – especially if stopping foreclosure entirely is the ultimate goal of the bankruptcy.
Bankruptcy is Temporary Foreclosure Protection – Get a Permanent Solution
While many homeowners may feel they have no alternative than to file for bankruptcy, it is – at best – a temporary stay to foreclosure. In many cases, however, an experienced foreclosure defense attorney can take advantage of that time to get a permanent foreclosure protection solution. Some of the options that are open to a homeowner to stop foreclosure include:
· Getting a modified mortgage through one of the federal government programs that reduce your mortgage payments by making changes to the original loan. Some of the changes include interest rate reductions, principal reductions, and more. This assistance is best managed by a foreclosure lawyer who will negotiate with the lender to ensure the homeowner is safe when all is said and done.
· Getting a mortgage refinance through the Home Affordable Refinance Program, or HARP, which ensures that the mortgage and even a second are paid off and better terms are designed. Some new terms may include extended time to repay, lower interest rates, and more. It’s important that a homeowner work with an experienced foreclosure lawyer to ensure that these programs are properly applied.
· Selling your home as a short-sale – a process that’s negotiated by your foreclosure lawyer to ensure that you are not later held responsible for summary deficiency judgments. Many homeowners who agreed without representation to a short-sale were later held accountable for tens, even hundreds of thousands of lost revenue by the banks.
While many so-called ‘experts’ will tell you that a good place to try to stop foreclosure is by going directly to your mortgage lender, homeowners across the nation have reported this was their first and biggest mistake.
The banks and mortgage lenders are simply too big to give any level of personal attention to a single homeowner and they typically continue with the foreclosure process even while one branch of the bank claims to be working on a modification for the homeowner. After the problem is pointed out, the homeowner may already be out on the street with their home repossessed. It’s simply too important a matter to leave to strangers. Homeowners represented by foreclosure defense experts can ensure that they’ll get fair treatment as well as the best possible outcome to their foreclosure problem and avoid later issues that could return to haunt their financial future.