How to stop a Foreclosure

how to stop a foreclosureIf a company claims to know how to stop a foreclosure, it’s likely they have another agenda. If you want to stop a foreclosure, there are several things to try, but only one way is GUARANTEED to work every time.

In some cases, a legitimate Short Sale offer can stop a Foreclosure, but it’s not guaranteed. Many Banks prefer a Short Sale to the lengthy and expensive Foreclosure process, but they will not hesitate to Foreclose these days, so be careful. If you need to talk to a San Diego Short Sale Expert, call Bekah Stone at 760.815.0861

As a result of the California Homeowner’s Bill of Rights, a loan modification application can stop a foreclosure in some cases, but once again, it is not guaranteed.

Bankruptcy will stop a Foreclosure EVERY time. Guaranteed. There are two main types of consumer Bankruptcy and each is a little different when it comes to dealing with a foreclosure.

In a Chapter 7 Bankruptcy, which takes about 100 days from start to finish, there are several perks for any Real Estate owned including immediate relief from any Foreclosure activity. No matter the individual State Laws, when a Chapter 7 Bankruptcy is filed, it will stop a foreclosure immediately no matter how far along in the foreclosure process and the homeowner is instantly waived of any liability associated with the property. This includes deficiency balance liability and income tax liability from any potentially cancelled debts on the property. Both can be HUGE, especially if a property is up-side-down or “under-water” significantly. The Chapter 7 can allow a few extra months in the home, rent free, so that’s a nice perk as well. Don’t forget, the Chapter 7 will stop a foreclosure, but it can also delete all Your credit card debt, medical bills, collections, personal loans, signature loans, and other unsecured debts as well. Just remember, the Chapter 7 doesn’t solve the foreclosure problem permanently, it just stalls it so you have time to sell the home traditionally or do a short sale. Technically, the Chapter 7 deletes the mortgage note, but doesn’t affect the lien on the property. The lien is what’s used to foreclose, so once you discharge the Chapter 7, foreclosure activity can resume if you haven’t found another solution.

Chapter 13 Bankruptcy, which takes 3-5 years start to finish, is a great option if you want to stop a foreclosure and ultimately stay in the home long-term. The same rules apply as Chapter 7 with regard to delaying the Foreclosure process. However, in Chapter 13, the homeowner can make up any missed payments over the life of the Payment Plan designed by the San Diego Bankruptcy Attorney. The Chapter 13 is especially helpful because of what’s called a “Lien Strip”. If a home is worth less than what the 1st mortgage amount is, and there is any other mortgages on the property, the additional mortgages or “junior liens” can be permanently deleted at the conclusion of the Payment Plan. The homeowner does not have to pay on the additional mortgages during the Payment Plan. Other debts can also be deleted during this process including: credit card debt, medical bills, collections, personal loans, signature loans, and other debts as well. The Chapter 13 could stop a foreclosure for longer than a Chapter 7 because of the time needed to negotiate the Payment Plan.

Bottom Line:
Chapter 7 Bankruptcy is a great tool guaranteed to stop a foreclosure, but the homeowner will still need a game-plan to ultimately avoid the foreclosure. Typically, we use the Chapter 7 to provide enough time to help the homeowner do a Short Sale and avoid foreclosure.
Chapter 13 Bankruptcy is the best tool to stop a foreclosure when the homeowner wishes to stay in the home long-term.

If you have questions about Bankruptcy or would like a Free Bankruptcy consultation, contact William McDonald and the McDonald Legal Group at 858.437.0103 – William has been my go-to resource for Bankruptcy solutions for the past 4 years and has taught me everything I know. He’s someone you can Trust.

Categories: Bankruptcy, California Homeowner Bill of Rights, Foreclosure, Loan Modification, Short Sale, stop a foreclosure

Tags: , , , , , , , , , ,

%d bloggers like this: