Chapter 13 to Stop Foreclosure
If you are facing a foreclosure, the Chapter 13 bankruptcy process allows you to bring your loan current and save your home. This assumes that you qualify for Chapter 13 relief. If you qualify, you can stop a foreclosure even if your mortgage lender has repeatedly denied you a loan modification and refuses to work with you to modify or restructure your loan. Chapter 13 is your federal right. It doesn’t matter if your lender refuses to work with you. The bankruptcy court will force your lender to let you get current over a 3-5 year repayment plan period. As long as your filing is done properly by an experienced bankruptcy lawyer, your lender will have no say in the matter and you will keep your home provided you make your Chapter 13 plan payments. The foreclosure sale will be avoided regardless of whether your lender desires to work with you. What is more, if you have a second mortgage or home equity loan, under appropriate circumstances a foreclosure attorney can permanently eliminate the lien encumbering your property. Our experienced foreclosure lawyer will help you stop foreclosure San Diego and keep your valuable financial investment that you have worked so hard to achieve and maintain.
Bringing Loan Current
In order to stop sale proceedings through the bankruptcy process you must present a repayment plan (to bring your mortgage loan current) that the court approves. It is true that upon the filing of your case, an automatic bankruptcy stay goes into effect that immediately halts the foreclosure sale. But that is only temporary. To permanently stop the foreclosure sale, you must propose a repayment plan that repays your missed payments and any unpaid property taxes over a 3-5 year period. Because your plan will ultimately result in bringing your home loan current, your lender is being paid in full and therefore is prohibited from being able to foreclosure on your home. You will need a San Diego foreclosure lawyer who is a Chapter 13 specialist because bankruptcy repayment plans have a high rate of dismissal when filed by novice practitioners. Only a lawyer who is a specialist will be able to consistently obtain court approval of a repayment plan and ensure that when you file bankruptcy to avoid foreclosure the proceedings will be handled in the smoothest manner possible to ensure that you save your home.
Depending on your circumstances, you and your attorney may elect not to stop foreclosure of property and let it go to sale, or a sale may have occurred before you met with your foreclosure attorney. If a sale has occurred, you generally cannot get the property back, unless you can show that the sale was wrongful, which is a very difficult standard to meet. Even if you have accepted that you have lost your home, your liability on the mortgage loan may not be over. Depending upon the nature and amount of liens against the property, the lender may be able to sue you for the deficiency amount. Also, if the lender writes off the balance of the debt you owed on the loan, you could incur after foreclosure tax liability, for example, for a home equity loan that was wiped out by the foreclosure. A bankruptcy can eliminate this type of tax liability.
Foreclosure Rates on Defaulted Loans
As lenders across the country attempt to clean up their portfolios in order to become more attractive to investors they must increase foreclosure rates on defaulted loans. Federal bailout funds temporarily halted foreclosure rates, however that did not last long. San Diego homeowners are disproportionately affected for two reasons. First, the housing prices are significantly higher than the national average and therefore the loans are higher and pose greater risk to lenders and investors. A defaulted loan in San Diego will therefore pose greater risk and overall exposure. Second, the San Diego local housing market has gone through exceptionally large rises and falls and continues to do so, creating more volatility. When housing prices are up they are up very high and people take out large loans with larger payments that make it more likely they will default on the loans. If you are behind on your mortgage payments and have tried to modify your loan without success, then you know first hand that lenders simply are not modifying most people’s loans. The percentage of homeowners that receive a loan modification is very small. Most people who are behind on their home loan payments and are in need of foreclosure help will file bankruptcy in order to save their home.
Eliminate a Second loan
The Chapter 13 process offers a unique legal remedy called lien stripping. Through the lien stripping process, if the balance owed on your 1st position mortgage loan exceeds the value of your property, then you may be able to eliminate a 2nd mortgage or home equity loan that encumbers your home. There are other technical rules that apply to the lienstripping process that your lawyer will need to discuss in order to determine whether the remedy is available in your situation.
Call Bankruptcy Legal Center today and speak with a San Diego bankruptcy attorney specializing in home foreclosure matters. Learn how you can permanently avoid foreclosure and save your home from a threatened auction sale.