Experiencing the threat of losing your home due to foreclosure can cause stress and overwhelm you. If you’re having difficulty making mortgage payments and are facing financial problems, filing for bankruptcy may be an option to help you avoid foreclosure. Learn how bankruptcy can assist you in navigating the home foreclosure process to safeguard your most prized possession.
Can You Protect Your Home?
If you want to know how bankruptcy can help avoid foreclosure, you must understand the process. Home foreclosure is the legal procedure that allows a lender to take back property from a borrower who has not made their mortgage payments. Usually, this occurs around 120 days without receiving a payment.
Bankruptcy could be an option to prevent the lender from taking your home. Here are a few ways that this process can help:
Get an Automatic Stay
One of the most powerful tools offered by bankruptcy is the automatic stay. When you file for bankruptcy, an automatic stay is immediately enacted, which stops all collection actions, including foreclosure proceedings. This temporary stay gives you time to assess your options, negotiate with your lender, and work towards a resolution.
File for Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as “reorganization bankruptcy,” is an effective option for homeowners who want to prevent foreclosure. By filing for Chapter 13, you can propose a repayment plan that allows you to catch up on missed mortgage payments over a period of three to five years. As long as you make your proposed plan payments and remain current on your ongoing mortgage obligations, you can stop the foreclosure process and keep your home.
Pursue a Loan Modification
Bankruptcy allows you to pursue a loan modification, making your mortgage more affordable and preventing foreclosure. The mortgage can be adjusted by:
- Reducing the interest rate
- Extending the loan term
- Adding any missed payments to the end of the loan
As a result, you could benefit from lower monthly payments more suitable for your current financial situation.
Negotiate with Your Lender
Filing for bankruptcy can open a dialogue with your lender. With the help of a bankruptcy attorney, you can explore viable alternatives to foreclosure, such as loan modification, forbearance agreements, or other arrangements to catch up on missed payments and retain your home.
What Else Can Help Prevent a Foreclosure?
Along with filing for bankruptcy, you may want to think about other options to help you get back on the right financial path. You may want to seek help from a housing counseling agency approved by HUD. They can provide valuable support in navigating the foreclosure process, help you understand your options, assist with loan modifications, and provide financial advice.
Additionally, you want to stay current on your ongoing mortgage payments. Even if you file for bankruptcy, you must show that you’re committed to fulfilling your financial obligations by making your monthly payments on time.
Prevent Home Foreclosure with Help from Our Bankruptcy Attorneys
Taking action quickly and seeking professional advice tailored to your unique financial circumstances is vital for preventing foreclosure and protecting your home.
If you are facing potential foreclosure and considering bankruptcy, the team at Axelrod Law Office in Lake County, OH, can help you understand your options. To learn more about how we can help you protect your assets, including your home, please call our office at (440) 271-8126 or submit a contact form to schedule a free, confidential legal consultation.