Featured News 2012 Avoiding Foreclosure: The Legal Actions You Can Take

Avoiding Foreclosure: The Legal Actions You Can Take

For many people, a home will be the largest purchase that they will make over a lifetime. It is likely that you have worked your entire life to save money, purchase a home, and continue making payments on that home. Over the last decade, however, the economy has taken a turn for the worse – a turn that has left many people without homes or with underwater loans. Many families who have just started to fall behind on their home loan payments may be worried of foreclosure threats and notices of default on their home loans. If you are one of these people, there are legal options out there available to you. By working with a skilled bankruptcy lawyer, you can resolve some of the unwanted debt and possibly avoid foreclosure altogether.

One of the many benefits of working with a bankruptcy attorney is having inside knowledge on the bankruptcy process and the different legal actions that you can take to avoid foreclosure. If you think foreclosure is inevitable, think again! There are many alternative options readily available to a consumer who is willing to stick around their financial situation just a little bit longer and fight for what should be theirs – a debt free future. Some of the most common actions a debtor can take to avoid foreclosure include the following:

Short Sale: This type of legal action can be taken to avoid foreclosure for individuals who owe nearly the same or more than the current value of the property, or a person who is "underwater" in his or her mortgage. A short sale of the property that you currently reside in will allow you to quickly sell the property without having to go through the process of foreclosure. It will require you to allow the lender or bank to put your property on the market for the amount in which you owe or the market value in exchange for a pardon of your debt owed to the creditor. It is strongly advised to embark on this process with an attorney; a creditor may seek a deficiency judgment if the value of the short sale is less than the valued owed.

Deed in Lieu of Foreclosure: With this type of foreclosure alternative, a debtor will provide the lender or creditor with the deed of the home in exchange for the forgiveness of the debt. While losing one's home is never an ideal situation, it will prevent the family from facing the status of foreclosure and can be used as a timelier process as opposed to foreclosure. This strategy to avoid foreclosure is often best for debtors who owe more on their mortgage than the home is actually worth. Don't forget to speak with an attorney when choosing this alternative path, as it is not the best option for everyone.

Chapter 13 Bankruptcy: By filing your petition for Chapter 13, you may put a stop to any existing or oncoming foreclosure proceeding. How can Chapter 13 protect a debtor from foreclosure? One of the greatest benefits awarded by hiring a bankruptcy attorney and filing a petition is the instant relief from creditor calls and lawsuits. According to the Fair Debt Collection Practices Act, a creditor is no longer allowed to directly contact a debtor who has sought the protection of a bankruptcy lawyer. Additionally, Chapter 13 gives a debtor the opportunity to reorganize his or her secured debts and pay them back over a period of up to five years. In some cases, a homeowner may have a second mortgage or a line of credit which is underwater. This is considered to be an unsecured loan and if the home is worth less than the initial mortgage payoff, the homeowner may have the available option of having the debt stripped away and avoided in Chapter 13. An additional benefit is that a homeowner who is in arrears may take up to five years to catch up on the previously missed payments. It is important to keep in mind that almost all unsecured debt will be taken away through the Chapter 13 bankruptcy process – which can leave a homeowner with considerably more resources to pay off their secured mortgage debt. If the debtor is able to discharge these unsecured debts, he or she may be able to avoid foreclosure altogether.

If you have recently defaulted on your home mortgage or you are afraid that you will be soon forced to do so, you have legal options! Don't hesitate to involve an attorney to understand more about the rights you have as a debtor under the Fair Debt Collection Practices Act and other federal acts that protect individuals just like you. Whether you have been the victim of a subprime lending scam, or you simply want to get out of debt right now, a local bankruptcy attorney will have the solutions you need. In addition to helping you avoid foreclosure, a bankruptcy attorney can help you reorganize your debts through bankruptcy or an alternative process. There are many options you have as a debtor, and giving up on your home and your financial situation should not be one of them! Contact your local bankruptcy lawyer to learn more about avoiding foreclosure on your home.

Related News:

How Many Times Can I File Bankruptcy?

If you filed bankruptcy in the past and you fell on hard times, you may be wondering if and when you can file bankruptcy again. Is it possible? Yes, but it all has to do with timing. Technically, ...
Read More »

Should I Wait to File for Bankruptcy?

There are times when delaying bankruptcy can provide significant benefits. This could be particularly true if there have been recent changes in your life such as relocating to another state or losing ...
Read More »

Common Myths About Bankruptcy

Let's be honest, struggling with debt is one of the worst feelings we can experience in our ever growing and spending society today. Often times it not only means we can't buy those new ...
Read More »