When your home is in foreclosure, you might feel as if it’s a lost cause with no way out. The good news is that there is relief that can help dig you out of the hole and even give you more time to catch up on payments. Bankruptcy can bring much-needed relief to families facing foreclosure, along with other additional benefits that can help you stress less.
WHAT IS FORECLOSURE?
In the state of Massachusetts, foreclosure typically happens outside of the state court system. There are several steps to the process, such as the Notice of Default and Right to Cure. It gives the borrower 90 days to bring the loan current, which is allowed one time during a five-year period.
The bank also has to mail to the borrower a Notice of Intent to Foreclose and Of Deficiency After Foreclosure of Mortgage, which is at least 21 days before the sale date.
When the bank publishes a notice of sale, the bank must notify the homeowner at least 14 days before the sale.
GETTING MORE TIME FOR PAYMENTS
When it comes to foreclosure, time is of the essence. However, if you are significantly behind on payments, it might be almost impossible for you to catch up inside of your 90-day window. Filing for bankruptcy allows you to extend the 90-day window, allowing more time for payment.
Once you file for bankruptcy, the court issues an order known as the automatic stay. The automatic stay requires creditors to stop trying to collect payment from you immediately.
Even if you are one day away from foreclosure, a bankruptcy and automatic stay will stop the process and immediate need for payment. Meanwhile, creditors are prohibited from collecting from you during this period and they also cannot foreclose.
HOW LONG DO YOU HAVE TO STOP FORECLOSURE WITH BANKRUPTCY?
The type of bankruptcy you file can make a difference in how long you have to stop foreclosure.
When you file Chapter 7, the case is typically opened and closed within three-to-four month window. Lenders will either wait for the bankruptcy to close before pursuing the foreclosure or will need to request permission from the court to lift the automatic stay.
If you file Chapter 13, you have up to five years to cure past due payments on your mortgage. Moving forward, you are required to make your regular mortgage payment but without having to pay for unsecured debts such as credit cards, medical debt, and personal loans. These unsecured debts are discharged at the conclusion of the bankruptcy. A portion of the monthly payment, which could be a fraction of a percent, will be evenly distributed to your creditors.
SHOULD YOU CONSIDER FILING FOR BANKRUPTCY?
Foreclosure is scary and can understandably cause people to panic. However, know that you have options once you begin receiving official documents in the mail.
Know that bankruptcy can slow down the foreclosure process and help you come up with another plan for saving your home.
The good news is that bankruptcy can be valuable in many circumstances. If you have a steady income but you’re facing too much debt and foreclosure, bankruptcy can help you get your life together and potentially save your home.
LEARN MORE ABOUT BANKRUPTCY AND FORECLOSURE
Attorney Swanson has extensive experience in helping Massachusetts residents file for chapter 13 and Chapter 7 bankruptcy. While helping you resolve your debt and potentially avoid foreclosure, we work to get you the best outcome possible for your situation. Contact Attorney Swanson today for a consultation at 508-857-5697 or 508-740-1900.