Foreclosure Article


Will bankruptcy save my home from foreclosure?

WILL BANKRUPTCY SAVE MY HOME FROM FORECLOSURE?

What will bankruptcy do?

When bankruptcy is filed it provides an automatic stay in foreclosure proceedings.  This means that a trustee sale cannot be held so long as the bankruptcy is filed before the trustee sale starts.

Do I automatically get to keep my home if I file bankruptcy?

No.  Bankruptcy does not allow the homeowner/borrower to keep their home while also ending their obligation to pay the home loan.  Bankruptcy may be tool to provide temporary or long term assistance to the borrower but it’s a strategy that should be pursued after consulting with an attorney.

How can bankruptcy help?

There are a couple of ways a bankruptcy might help, and may be recommended by your attorney. 

The effect of filing a bankruptcy grants an automatic stay in debt collection efforts including foreclosures.  An automatic stay basically means all collection, repossession, and foreclosure efforts are put on hold until the bankruptcy process is complete.  This period may allow your attorney to work through your foreclosure case more thoroughly or give her or him time to work something out with the lender. 

Another way a bankruptcy might be helpful is that it may allow certain debts to be discharged, meaning your obligation to pay ends, or it may reorganize your debts into a more manageable payment.  This may help by freeing up money so that you can more easily make your monthly payments.

Is there a downside to declaring bankruptcy?

Bankruptcy may negatively impact your credit score however at the point most people are considering bankruptcy, their credit scores have already taken a hit.  There may be other cons to pursuing the path of a bankruptcy but they will depend on other factors that your attorney will discuss with you.  Remember no one case is the exactly the same as another. 

Bankruptcy is often made more difficult when mistakes are made in the process.  Often people will file before meeting with an attorney and overlook important facts or issues in their case.  Other common mistakes occur when individuals, in anticipation of filing bankruptcy, make additional purchases or attempt to pay off certain debts to maintain relationships with whoever lent them the money.   This should be avoided until consulting with an attorney because certain purchase may make the bankruptcy look fraudulent, and payments made can be undone through the bankruptcy process - adversely affecting both the borrower and the person or business that lent the money.  Meeting with an attorney, even if it’s just for a brief consult could prove instrumental in making the process smoother, less stressful, and help avoid these and other pitfalls. 

Where can I get more information about bankruptcy?

The US Bankruptcy Court of Arizona has vast amounts of information online as well as a help center and hotline to answer questions.  The hotline number is 866-553-0893.  However, individuals should also contact legal aid, especially if they are also dealing with foreclosure related issues or at risk of foreclosure.  To apply for legal assistance use the Access To Justice Online Intake System.

Where can I find legal help with a foreclosure?

Individuals faced with loss of a home through foreclosure/trustee sale or dealing with issues related to a foreclosure can apply for free and reduced fee legal services through the Access to Justice Online Intake System, the link is also available on the top right of AZLawHelp under the “LegalLEARN” section. Individuals may also contact legal aid directly, however due to high call volume there may be long wait times on the phone and the phone system may disconnect calls when overwhelmed. To find the legal aid agency serving a particular county in Arizona, select the desired county in the drop-down under the section titled “FIND FREE LEGAL HELP” on the right column of AZLawHelp.


Comments:

QUESTIONS

  • I lost my home to foreclosure back in 2010.I have received a payment from the mortgage relief settlement fund. I want to know if I can seek legal action to file a claim for further compensation. I lost over $100,000( my down payment) when I lost my home. A bank that was part of the settlement was my lender. Thank you.
  • I recently returned home from a 3 year prison sentence. The home i own was vacant and went into foreclosure. The mortgage company changed the locks, however i still own the home and plan on refinancing and keeping it. Am i allowed back into the house now, to live there since i still legally own it?
  • I own a property, not my main residence, that was part of a 2010 C7 bankruptcy. We reaffirmed and kept the property. We have made all of the payments since, but in the past year our finances have declined. We have tried to rent the property without much success and we have paid over $6000 above the properties income to maintain it. It is empty again and we simply cannot continue to pay the mortgage and HOA any more. It is worth about what I owe. Can I allow the property to go to foreclosure or short sale after being part of a bankruptcy?
  • How do I foreclose on a property that has a breech of contract for a promissory notes that was secured by the home with a lien and one that was recorded last year? What is the process?
  • I am filing a foreclosure on an agreement for sale because of non payment for 5 months. Do I need to send a letter of intent to foreclosure and wait 60 days before filing with the court?
  • My father passed away in September, 2016. I am the executor of his estate and I have a lawyer representing me and the estate. His house is paid off but he has a 7,000 home equity line of credit. There is no money in the estate to pay any bills except the utilities. It is for sale and hopefully will be sold soon. I received an Act 91 notice. Can a house be foreclosed on that is in probate? There is no money to pay the home equity line of credit bill or the taxes owed till the house is sold
  • I filed for ch. 7 bankruptcy and my debts were discharged on June 2011. To this date I'm badly behind on my house payments, and my lender offers me a reduced monthly payment of $350. The problem is that my lender does not want to make any promises in writing and does not give me straight answers on what happens if I keep my end of the deal. I'm affraid my lender will simply foreclose when it may fit its interest, disregard of my needs. Also, it is wise to enter into any deals post bankruptcy if my debts are discharded already and thus, uncollectable? Thanks!
  • I have a balloon payment due this November. And I believe my house isn't even worth what I owe at this point. Is someone willing to lend in these cases? Should I be shopping for a fefinance this early? I know we are negative, but we love our house and know it will rebound one day, just need to get through this hard time. Any idea's? Thanks, Tomm
  • MY HOUSE IS IN FORECLOSURE NOW, WITH A SALE DATE OF NOV 13. CAN I DECLARE BANKRUPTCY AND KEEP MY HOUSE?
  • My home was to be foreclosed on 6/13/14 my husband and I filed for bankruptcy on 6/11/14 and advised Ocwen, our servicer and provided the case # to them, Ocwen in turn advised us that there would be NO foreclosure that they would put a hold on it. About a week after that we received notice of the foreclosure sale date having been moved up to 7/8/2014, I again called and they advised me that there was NO sale due to the bankruptcy filed, then in next 2 weeks I had people coming to change locks on my doors which didn't happen bur was advised that my home was now REO that it had been foreclosed.

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