How Can I Save My Home From Foreclosure?

Many homeowners face this difficult question when foreclosure looms.

The reality is, there are several ways to protect your home. First, you can defend your home in the foreclosure action. If you have a valid defense and enough money to afford an excellent foreclosure defense attorney to fight the case, you stand a good chance of winning that fight. Additionally, you may even get your attorneys' fees paid by the mortgage company if you are victorious. But, if the mortgage company decides to re-file another foreclosure lawsuit, you could find yourself fighting them again. If this is a viable option, I would highly suggest reading our e-book on foreclosure defense.

The other option for homeowners is to file a Chapter 13 bankruptcy. The Florida bankruptcy courts provide individuals with two options when trying to save their homes. First, you can ask the bankruptcy court after you file Chapter 13 to order the mortgage company to go to mediation with you. For those of you who don’t know what mediation is, mediation is a form of alternative dispute resolution. At a mediation, the parties (you, the homeowner, and the mortgage company through its representatives) attempt to come to a resolution of your mortgage situation. This process places the homeowner on an equal playing field with the mortgage company. The homeowner has the ability to talk directly to the mortgage company representative and its attorneys. Our offices have found this process to be extremely successful when it comes to modifying mortgages and bringing homeowners current on their obligations. If the homeowner is successful in modifying his or her mortgage, the next part of the process would be to figure out whether or not the homeowner needs to stay in bankruptcy. Yes, a homeowner could use the bankruptcy process to save their home and modify their mortgage and then voluntarily dismiss their chapter 13 bankruptcy, if it is in their best interest to do so. This conversation would need to take place between the homeowner and their bankruptcy attorney immediately after the modification to discuss the pros and the cons of this strategy. This is another reason why you need to find, interview and hire the best bankruptcy attorney in town.  

Second, the bankruptcy courts provide an opportunity for a homeowner to begin paying the regular monthly mortgage payment immediately after filing the bankruptcy along with a payment toward the arrears. This is called a “cure and maintain” plan. After chapter 13 bankruptcy filing, the homeowner begins maintaining regular monthly mortgage payments to the mortgage holder as part of his or her plan of reorganization. At the same time, the homeowner pledges to pay a portion of the arrears over time. The homeowner can take up to five to cure the mortgage arrearage. Under the five-year option, the homeowner is making each monthly payment and 1/60 of the outstanding arrearage on a monthly basis.

To put real numbers into this equation, imagine that the homeowner is in arrears $6000 at the time they filed a Chapter 13 and the regular monthly mortgage payment is $1000 a month. The homeowner is six months in arrears. After filing chapter 13, the homeowner can propose a plan to re-pay the $6000 in arrears to the mortgage company over 60 months at $100 a month. At the same time, the homeowner must maintain regular monthly mortgage payments in the amount of $1000. The homeowner must do this by paying $1100 to the trustee each and every month along with a trustee fee or commission of 10%. If the homeowner can successfully complete this plan, he or she would have made an additional five years' worth of regular monthly payments and cured the arrearage at the same time. But, best of all, the homeowner would also be dealing with all of their other debts at the same time. This is what I consider the bonus plan. Not only is the homeowner building equity in their home, but they are discharging any and all dischargeable debts and coming out of the bankruptcy with more equity in the home with a lower debt to income ratio.

If you have any questions about fighting your foreclosure or how either of these two bankruptcy plans would be applied to your situation, please consider calling us for a free strategy session right now. We offer free strategy sessions to each and every homeowner trying to save their home. It’s what we do.