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Foreclosure and Bankruptcy

Foreclosure and Bankruptcy

For most people, a mortgage is their most expensive asset and largest debt. If the debt owed on your home becomes too high of a financial burden to bear, you have a short window to seek help for your missed payments before losing the home.

Foreclosures 101

Foreclosure is a legal process by which mortgage lenders can take a property from a homeowner that has defaulted on their loan. Typically, the foreclosure process lasts several months, depending on the state you live in. However, there are situations in which a mortgage lender may begin the foreclosure process after the first missed payment. Through the foreclosure process, the lender can evict your family after sell the home to satisfy the debts owed.

Although the foreclosure process can be swift and severe, there are options for resolving outstanding mortgage debts. But, time is ticking on the clock of debt resolution.

Foreclosure Solutions

There may be a couple of options to get you out of foreclosure trouble before the sale takes place. It may be that you need to file for bankruptcy if none of the other options like loan modification is available to you. It may be that you have let your situation go too long and the foreclosure sale is eminent like within a few days. Even in this situation, you might still have a chance to save your home if you are eligible to file for bankruptcy prior to the actual execution of the foreclosure sale.

An automatic stay will be put into effect immediately. This is like an injunction that won’t allow the mortgage holder to proceed or to continue trying to collect. The lender could also petition the courts to lift the stay so they can continue with their actions. This may be successful but it will stall the foreclosure proceedings. It will at least buy you some time to seek out other possible alternatives. There may be a possibility your loan holder will give you a loan modification, these are few and far between but it is worth asking. If you do seek out a loan modification you will probably have to call every day and get them to answer your questions. Some people have had success in asking for a modification to lower the interest rate and reduce the payments. They have also received the modification in some instances after declaring bankruptcy.

After you have filed a bankruptcy, you will be given a case number and eventually an estimated release date, which is your discharge and to reclaim control of your properties. In most cases, you may be able to stay in your house and continue to pay off the mortgage lender if you have continued your payments on schedule.

Both the foreclosure and bankruptcy process are not for the faint of heart. They both require the help of an experienced attorney. Contact an experienced Sacramento bankruptcy attorney today to discuss your options for keeping your home while resolving your debts.

Bankruptcy Stops Foreclosure

Bankruptcy Stops Foreclosure

If you are behind in your mortgage payments and worry you may lose your house to your lenders, you may want to consider filing bankruptcy. Bankruptcy can stop the foreclosure process by implementing the automatic stay, which stops most collection attempts against you.

Filing bankruptcy will not stop the foreclosure process forever, and it will not relieve you of the obligation to make your home payments. It will, however, give you some time to attempt to figure out what you want to do with the home and how to get your finances in better shape.

Eliminate Debt

If you do not want to keep your home, you can surrender the property to the lender and cancel any remaining mortgage. You will also be able to eliminate all other qualifying debt in bankruptcy, such as credit cards, medical bills, payday loans, and late utility bills.

If you do want to keep your home, you will have three to five years to catch up on the payments. Sometimes you can even restructure your loan as part of the bankruptcy process, making it easier to make the payments in the future. You will also need to keep current on your house payments if you wish to keep the collateral.

Credit Rating

If you are worried about your credit rating if you file bankruptcy, remember a foreclosure will not be any more favorable to potential lenders. The difference will be that you will get to keep your home if you wish when you file bankruptcy.

If you are behind in your mortgage payments and need some time to figure out how to proceed, contact a Sacramento bankruptcy attorney to discuss your options.

Top 4 California Foreclosure Mistakes to Avoid

Top 4 California Foreclosure Mistakes to Avoid

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Insolvent consumers who are not able to stay current with their mortgage payments may face foreclosure proceedings from their mortgage lender. Due to the number of California foreclosure avoidance measures available to you, avoiding these mistakes will help steer you in the right direction toward defense against foreclosure.

Waiting too Long to Take Action

Waiting too long to defend a home against a California foreclosure is the single biggest mistake that individuals make when facing a looming foreclosure. If you take only one thing away from the article, it should be that there are options available to prevent a foreclosure.

Neglect to Call Your Mortgage Lender

While it may seem that your mortgage lender would not be interested in negotiating your mortgage contract, it is in their best interest for you to continue maintaining the home and making payments. Your mortgage lender can help you file for a loan modification, and therefore, should be your first call in defense of a foreclosure. Even if your lender refuses to modify your existing loan, California Foreclosure law can prevent initiating a foreclosure while your application is pending.

Foreclosure Rescue with Upfront Fees

Foreclosure rescue companies that require an upfront fee to receive housing counseling or to apply for a mortgage assistance program should be avoided. There are plenty of services offered for free if you are facing foreclosure. The US Department of Housing and Urban Development provides free, HUD-approved housing counseling, which can provide you with details on the initial steps in avoiding foreclosure.

Fail to Consider a California Bankruptcy

Some consumers feel that once they receive a notice to proceed with foreclosure of their home, they might as well give up the home. If you desire to remain living in your home, nothing could be further from the truth. Not only can filing for California bankruptcy protection immediately halt your foreclosure, but a Chapter 13 bankruptcy can also allow you to spread out mortgage arrears over a period of three to five years, giving you valuable time to get caught up on payments.

Bankruptcy lawyers in Sacramento, California have the unique ability to utilize the US Bankruptcy Code to ensure your right to debt relief. Avoid these California Foreclosure mistakes beforehand by contacting a bankruptcy attorney in Sacramento who will fight to prevent your foreclosure and safeguard your legal rights.

Vacation Homes in Chapter 7 Bankruptcy

Vacation Homes in Chapter 7 Bankruptcy

We’ve discussed what happens to your primary residence when filing for bankruptcy protection, but what happens to vacation homes in Chapter 7 bankruptcy? Chapter 7 bankruptcy protection can, in many cases, save your primary residence assuming you are able to exempt the equity in the home, or if the amount of equity you have is insignificant. While there is no bankruptcy law that states you cannot keep a vacation home or second house, you may have difficulty keeping it in a Chapter 7 bankruptcy if you have significant equity in the vacation home.

When you file Chapter 7, all property in your name will enter into what’s called your bankruptcy estate. A Bankruptcy trustee will be assigned to sell all nonexempt property in your estate to pay back your creditors. If you have a second home, and live in a state that has a wild card exemption, you may utilize this to cover equity in your vacation home. A wild card exemption is essentially an extra exemption that you can use to protect a certain amount of property of your choosing. States have amounts and rules regarding wildcard exemptions, therefore you’ll want to ask your bankruptcy attorney if your state has a wildcard exemption and if so, which option will give you the highest dollar amount in exemptions.

When attempting to find out if you will be able to keep both homes in a Chapter 7 bankruptcy, you should obtain recent appraisals or comparative sales analyses and then subtract the balance of loans and liens on the properties. Once the equity is calculated from your second home, the trustee will determine to sell the house or not depending on if there will be enough money left over after deducting the costs associated with selling the property, the trustee’s commission, paying you your exemption, and paying off liens associated with the home. If the trustee believes that selling the home will still produce the money to pay your creditors back they will most likely sell the second property.

The exemptions that can be used to save your vacation home in Chapter 7 bankruptcy differ from state to state. Because of the complexity of the bankruptcy laws combined with the enormous implications of your decision-making during the bankruptcy process, you should definitely obtain the services of an experienced Sacramento bankruptcy attorney where you file. This will not only help ensure that your debts are discharged at the conclusion of the bankruptcy, but also ensure that you keep your vacation home if it is possible.

Understanding Second Mortgage in Bankruptcy

Understanding Second Mortgage in Bankruptcy

Some homes have depreciated in the recent times. You might consider getting your second mortgage in bankruptcy discharged under chapter 13. The elimination of the second mortgage is carried out by a process termed as lien stripping. Understanding second mortgage in bankruptcy can shed some light on the process of debt relief with secured debts.

Understanding Second Mortgage in Bankruptcy

Since the decline in the real estate market over the past decade, many homeowners have to bear the brunt of their mortgage. In most cases the mortgage being higher than the current worth of their house. In such cases, the homeowner will be required to pay back a second or third mortgage as a junior lien in lieu of the deficiency. However, in chapter 13 bankruptcy, you have a tool called lien stripping. This can help you get rid of your second mortgage. The US bankruptcy Court orders the lender to withdraw its lien on your property. In other words, your second mortgage (which is a secured debt) is converted to an unsecured debt just like your credit card debt.

However, you can opt for lien stripping of your second mortgage. This can  be done when your first mortgage exceeds the market value of your property. In Chapter 13, the second mortgage on your house is treated as a non-priority unsecured debt. This is treated just like your credit card or medical debt. This implies that you will be required to make only a partial payment towards your second mortgage in chapter 13. Once the chapter 13 plan is dismissed, the balance due on your mortgage is also automatically discharged.

If you have filed for a chapter 13, you automatically get the benefit of not having to pay for a second mortgage. A lean stripping would be able to provide the homeowner with some relief since he/she will be saved from paying the additional amount.

Bankruptcy Effects on Mortgages

Bankruptcy Effects on Mortgages

In case you file for bankruptcy while you have an active mortgage loan, there are many different ways in which it can play out. Depending on your lender, you can reaffirm the loan or you might be eligible for a loan modification. Some lenders will continue to accept payments, while others might simply stop taking money from you after you file. Bankruptcy effects on  mortgages also depends on whether you are filing for a chapter 7 or chapter 13.

Mortgage loans

A mortgage is a home loan that a bank or a lender gives you to make it possible for you to buy a home. Once you agree to the terms and the property is signed over to you, the bank will hold a certain lien over the property that you bought. That means, even though the property is yours, the bank will hold a certain amount of interest over it. It is done to make sure that the bank doesn't lose money if you stop paying your EMIs. The mortgage supplying company will have this lien on the property till the payments are completed.

Bankruptcy Effects on Mortgages

Filing for bankruptcy, especially a chapter 7, where all your assets are liquidated, you are no longer legally obligated to repay your loans. But that being said, you still do owe the lender money and the lien that the lender holds on the property still stands. So, even if you don't legally have to pay the loan, the mortgage supplier can take hold of the property. The idea is to keep the home, so, if you do have to file for bankruptcy, make sure you speak to your lender beforehand and work out a settlement procedure that lets you keep the house and you keep paying your loan. With a chapter 13, you will not lose your house, but you will have to chart out a repayment plan.

If you are facing foreclosure or worried about your mortgage payment, contact a Sacramento bankruptcy lawyer to discuss your options.