According to RealtyTrac, 2015 saw more than 1 million foreclosure filings. Though that’s fewer foreclosure filings in any year since the financial crisis, 2015 saw more foreclosure filings than in any year between 2000 and 2005. Losing one’s home can be a scary, intimidating and difficult process. No one should go through it alone. Groce & DeArmon has been helping individuals in Southwest Missouri with bankruptcy and foreclosure cases for more than 13 years. We are here to help in this difficult time, and we believe the best place to start is with information.
What Does Foreclosure Mean?
Most people purchase their homes or property with mortgage loans. This allows people to ‘own’ their property without purchasing the property outright. The lender or bank purchases the house, and the homeowner pays the bank in monthly installments. The process of foreclosure starts when the lender tries to take the house away from the homeowner because he or she is incapable or unwilling to make his or her monthly payments.
The process of foreclosing can take months, but it often results in the homeowner’s eviction. On top of being a traumatic experience, foreclosure and eviction adversely affect a homeowner’s credit score. Getting a future loan or house can be more difficult, and landlords may be wary of renting to an evicted homeowner.
Steps to Help Prevent Foreclosure
Though it may be difficult and embarrassing, it’s important for a homeowner to contact a lender if he fears he will have difficulties making payments. Foreclosures take months and can be a complicated, taxing process for lenders. When a homeowner contacts his lender, this gives them an opportunity to work out a plan. This can limit frustration and anxiety for both parties. Homeowners should contact a lender before missing a payment and before getting behind.
If the homeowner cannot work out something manageable with the bank, he or she should get legal advice and assistance immediately. Groce & DeArmon understand the law and we have experience working through both bankruptcy and foreclosure cases. Do not hesitate to reach out to us; we are here to help. We can help homeowners escape foreclosure altogether or safely navigate the process.
How Are Bankruptcy and Foreclosure Related?
Bankruptcy and foreclosure are often spoken about jointly for several reasons. Both afflict people on the down and out, people recently laid off or those overburdened with financial debt. Bankruptcy and foreclosure may also be discussed as one in the same because filing for bankruptcy, in some situations, may save a homeowner’s house.
The court issues an order called the automatic stay when an individual files for Chapter 13 or Chapter 7 bankruptcy, and foreclosure litigation stops while the bankruptcy is pending. If, however, the bank has already given a notice of default before a homeowner files bankruptcy, then the lender could ask the court for permission to go on with the foreclosure sale before the three months.
Though homeowners can still lose their homes through foreclosure, filing Chapter 13 Bankruptcy gives them a fighting chance of keeping their homes. If a homeowner’s house is worth less than or equal to the cost of his or her mortgage, Chapter 13 Bankruptcy can label these extra mortgages as unsecured debt. This allows the homeowner to pay off these extra mortgages at a reduced rate. The homeowner will need to not only keep up with payments on the first mortgage, but also pay back late payments (the arrearage) on an agreed upon schedule.
If you want to know more about bankruptcy and foreclosure, contact Groce & DeArmon today. We’re here to help you get on the road to recovery.