In our blog Monday, we told you about Dominick Vulpis, a New Jersey man who found out his home was in foreclosure after he failed to pay a $140 city sewage bill. Today, we would like to discuss how bankruptcy can help save your home from a foreclosure or at least delay the process.
While Vulpis’ story is rare and he was able to save his home, many mortgages are underwater or people simply cannot afford to make payments. Last decade lenders, knowing that payments would balloon over time, gave money to future homeowners knowing that they would not be able to make payments. Because of these predatory practices, there are now more than 1.5 million homes in foreclosure.
You do have options if you are a struggling homeowner. A Chapter 7 and Chapter 13 bankruptcy can help you if you’re overwhelmed financially. Through both forms of bankruptcy, you can delay the foreclosure process. A bankruptcy filing generates an automatic stay that prevents lenders from foreclosure sales until a bankruptcy is complete. This can take several months, and afford you the time to renegotiate the terms of your mortgage with your lender or work on other housing options. A Chapter 13 bankruptcy also allows you to work out a repayment plan with your lender, increasing the likelihood you’ll be able to stay in your home.
If you are facing foreclosure, the timing of a bankruptcy filing is important. States have different laws about foreclosure notifications and sales, including limits on the number of days before a foreclosure sale can take place. If foreclosure is imminent, an attorney will be able to provide you with the best advice about when to file for bankruptcy, as extending this process can have an impact on how long you can negotiate with your lender.
Keep in mind, bankruptcy also allows you to discharge unsecured debt like credit card debt and medical bills, which can help you free up money to make past due mortgage payments. If you feel like you are underwater with your home, our Washington DC and Maryland bankruptcy attorney can help you with a free consultation by filling out the contact form on this website or by calling (202) 888-8454 to schedule an appointment. We can offer you the best solution for whatever your debt issues may be.