In the current post-covid climate many homeowners are finding themselves in a position they never would have imagined: facing foreclosure and a looming sheriff sale. During the pandemic, job loss, layoffs, shutdowns, and illness caused payments to be missed.
The government response was to put moratoriums in place to prevent homeowners from losing their residence. As these moratoriums are being lifted in some places, despite the Center for Disease Control’s continuation order, mortgage companies are once again filing or reinstating foreclosures. This blog will provide information about how you may be able to save your home in the bankruptcy context as Dayton, Northern Kentucky, and Cincinnati foreclosures are on the rise. If you would like further information, please visit our bankruptcy page.
Before Filing for Foreclosure
I receive frequent calls from potential clients seeking a foreclosure attorney because they have been served with a summons and complaint for foreclosure. In some cases, there may be defenses to your foreclosure available. Foreclosure defense can be a very complex area of law, especially when there are Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) violations at issue.
Option 1: Mortgage Company Violations
Mortgage companies must follow certain guidelines under state law when foreclosing on your home. If you feel like your mortgage company has violated your rights in the foreclosure process or in servicing your loan, please seek legal advice. However, if you have been advised that there are no viable defenses to your foreclosure other options may be at your disposal.
Option 2: Short Sale or Deed-In-Lieu
In the case where you no longer have the income to pay your mortgage, you may have the option of a short sale or deed-in-lieu. Keep in mind as you explore these options that they may have forgiveness of debt consequences associated with them.
Option 3: Mortgage Modification
In every case where a potential client is facing foreclosure, I begin by recommending that they submit the necessary paperwork to request a mortgage modification with their mortgage company. This will include a statement of hardship explaining what circumstances led to getting behind on your payments. The client may qualify for payments to be reduced or delinquencies to be added to the back end of the mortgage. Sometimes a modification may solve the homeowner’s issues without anything more.
Option 4: Chapter 13 Bankruptcy
If the modification process is not fruitful and the client has sufficient income, it is possible that a chapter 13 could be filed with the Bankruptcy Court to catch up the mortgage arrearage over time while paying the regular monthly mortgage. A chapter 13 bankruptcy plan can last from three to five years depending on your income and the amount of time needed to pay the delinquent payments. Even if the court has issued an order for foreclosure and a sheriff sale has been scheduled, a chapter 13 bankruptcy can stop the sale.
Filing a chapter 13 bankruptcy may also be beneficial to resolve other debt issues the client may have including medical bills and credit card debt. Most times these unsecured debts will be paid just pennies on the dollar during the bankruptcy process. Chapter 13 can also provide a method to pay back taxes and automobile loan delinquencies.
If you are facing foreclosure and would like to speak to an experienced attorney to assess whether you can save your home, please contact the law office of Finney Law Firm at 513-797-2857.
Our practice areas include bankruptcy, corporate transactional, commercial and residential real estate, estate planning, employment and labor, personal injury, business and commercial litigation, tax valuation, and public interest law.
