When purchasing a home, foreclosure may be the last thing on your mind, but sometimes situations occur that put you in jeopardy of losing your home. Job loss, mounting debt, loss of ability to work, or even divorce impact many homeowners’ ability to make their mortgage payments, and eventually find themselves in foreclosure.
What Does Foreclosure Mean?
Foreclosure allows a lender to sell mortgaged property and use the proceeds to pay the outstanding debt on the home or property loan. A home goes into foreclosure only after there is a history of late or non-payment of monthly mortgage payments, and after the lender has made numerous documented attempts to reach the borrower for payment.
If your home is near or in foreclosure, you will receive a Notice of Default from the mortgage lender. This legal document notifies you that the property will enter foreclosure within a defined period of time, provides an opportunity for the borrower to pay a certain amount to stop the foreclosure process, and bring payments up-to-date. If you have fallen behind on your mortgage payments, be sure to open and read all mail received from the lender so you are aware of the status of your loan.
How Can You Avoid Foreclosure?
The first thing you can do to avoid foreclosure is to contact your lender when you realize that making your payment will be a challenge. If the situation is temporary, such as being between jobs, etc., it is likely that the lender will work with you to develop a temporary payment plan until your situation is back to normal. You may need to consider other expenses you can eliminate or reduce during this period as well, to help meet the minimum payments.
Another option you can discuss with your lender is refinancing the loan. If you currently have a 15 or 20 year mortgage, refinancing to a 30 year loan will reduce payments and ease your monthly expenses. Refinancing often involves some cost, so be sure to ask your lender about this.
How Declaring Chapter 13 Bankruptcy Can Help
Bankruptcy is a scary term, but for many people, it can save and protect their home and provide a welcome relief from creditors while working to get their financial life in order. Chapter 13 bankruptcy allows someone with a steady income to develop a plan to repay all or most of their debts, without losing their home, as it automatically stops any collection actions against a debtor or their property, and stops foreclosure proceedings immediately.
To qualify for chapter 13 bankruptcy, the applicant must have less than $394,725 in unsecured debt, and less than $1.2 million in secured debt. The applicant can be self-employed or own an unincorporated business, but must be able to provide proof of steady income. The process begins by filing a petition with the bankruptcy court in the jurisdiction of your home or property. Check with the court to find out what financial information you need to supply. This generally will include:
- Schedule of assets and liabilities
- Schedule of current income and expenses
- Schedule of executor contracts and unexpired leases
- Statement of financial affairs
- Evidence of income
- Tax returns or transcripts of most recent tax year
The court will appoint a trustee to evaluate your case. If bankruptcy petition is approved, the bankruptcy clerk will notify all creditors whose names and addresses have been provided. The trustee will consolidate the debt, negotiate with the creditors, and develop a plan to repay creditors over three to five years. You make a monthly payment to the trustee, who then disperses payments to the creditors.
Find Out More
If you are worried about foreclosure and have questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Contact us today.