When you are past due on your mortgage and your lender is threatening foreclosure, it can be overwhelming. You may be wondering what you can do to try to save your home.
While no two cases are identical, most homeowners have several options available to them. Below are a few actions you may want to[…]
Foreclosure Attorney serving Brevard County, Florida
When you are seriously delinquent on your mortgage payments and foreclosure is imminent, do not ignore the problem! The faster you take action and contact us for help, the more likely you are to obtain a positive result. There are several options available for avoiding foreclosure of your home, which can preserve your ability to re-establish your credit score. In fact, you may even qualify to buy another home in the future.
Below are a few tips to consider when you first believe that your home is vulnerable to a foreclosure action:
Sell your house. Selling your home on your own prior to it being auctioned off by your mortgage lender is not only better for your credit score, but it may also allow you to keep any equity that remains in it. Where possible, you should take action to make your home appealing to potential buyers, even if it means reducing the asking price to below what you need to pay your mortgage loan in full. We can help you understand what a short sale requires or if paying the remaining deficiency is manageable for you.
Negotiate better payment terms. It never hurts to discover whether your mortgage lender is willing to work out a deal with you. This may include negotiating to reduce the applicable interest rate and/or to lengthen the term of your loan to lower the amount of your monthly payments.
File Chapter 7. When you file a Chapter 7 case, the foreclosure activity against you must cease, at least for a little while. During this time you can negotiate with your lender. If you decide to surrender your home in your bankruptcy filing, you can usually discharge any deficiency balance that is remaining on your debt after your home is sold at auction.
File Chapter 13. If you have a steady source of income and you want to keep possession of your home, filing a Chapter 13 case can allow you to catch-up on your past due payments. You can make small payments in your repayment plan that are applied to your deficiency so when you successfully conclude your Chapter 13, you are current on your mortgage loan.
Short sale. In order to short sale your home (sell it for less than what is owed on your mortgage), your mortgage lender must be involved and approve the sale. Many lenders will agree to this type of sale in order to avoid the time and cost of the foreclosure procedure. It is important that verify that the short sale of your home will be considered full satisfaction of your mortgage debt. Otherwise, you will remain liable for the deficiency balance.
Let us review your unique financial situation before you pursue any of the above options and help you understand which strategy is the most beneficial for you. We can make sure you understand the tax consequences, if any, of your decision as well as the other advantages and disadvantages.
Don’t delay any longer. Contact Us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida. We offer free initial consultations for bankruptcy and foreclosure defense.
One of the primary concerns debtors have when they file a Chapter 7 or Chapter 13 case is what will happen to their home. Bankruptcy law provides a debtor with a variety of exemptions which remove certain assets from being included in the bankruptcy estate. Your home typically falls within the exemptions and filing a bankruptcy may even positively impact your real property holdings.
When you own a home that is not worth as much as you owe on your mortgage, or you have multiple mortgages on it, you may be allowed to strip or remove a lien. In a Chapter 13 case, a debtor may be able to prove that an underwater home does not have sufficient value to support the inferior mortgages. As a result, the second or third mortgages can be treated as unsecured debt in your repayment plan. This effectively removes the mortgage lien from your home and allows you to pay a typically small percentage of what is owed on your loan.
In some cases, you may have the option to negotiate with your mortgage lender to reduce the applicable interest rate or re-amortize your loan. By renegotiating your mortgage loan, you can obtain a lower monthly payment which can allow you to remain in your home.
A debtor who wants to get out from under his or her mortgage loan can surrender the home back to the lender in a bankruptcy. The mortgage lender must accept the surrender of the home as full satisfaction of the enter loan amount because any remaining deficiency balance is treated as unsecured debt in the filing. In other words, if you file a Chapter 7 case the deficiency balance will be discharged in full. If you file a Chapter 13 case, it will be treated as an unsecured debt under your Chapter 13 plan and you will pay pennies on the dollar owed.
If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
If you are struggling to make your house payments, you are probably investigating all of your debt relief options. There are several options that may be available to you, but this blog focuses on the pros and cons of foreclosure versus a deed-in-lieu of foreclosure.
Some mortgage-holders offer a deed-in-lieu to their borrower as a means for avoiding the foreclosure process. A deed-in-lieu is another name for surrendering your property back to your mortgage lender. Although it has its benefits, it is important to understand that a deed-in-lieu also has some significant disadvantages.
A lender benefits from obtaining a deed-in-lieu because it saves it the time and money expended in the foreclosure process. In order to avoid foreclosure, your mortgage-holder may ask that you sign over the deed to your house. This legally transfers title to the property to your lender. As the borrower, it allows you to handle the transaction quickly and privately. A homeowner may be able to negotiate certain benefits with the lender in exchange for the transfer. Of primary concern is negotiating a waiver or a reduction of the deficiency balance that you will otherwise remain liable to pay after the property has been auctioned.
Another important factor to consider is that if you use the deed-in-lieu process, the Internal Revenue Service (IRS) considers it “debt forgiveness.” This means that the amount forgiven by your mortgage lender will be considered as income by the IRS and you will be taxed on it. If you are not prepared, this can be financially devastating.
If you are facing a foreclosure and trying to decide whether or not to give your lender a deed-in-lieu, you may want to consider filing a personal bankruptcy. A Chapter 7 or Chapter 13 case could allow you to discharge or eliminate the deficiency balance that is left owing after your home is auctioned. A bankruptcy may also help you deal with your taxes.
To learn more about your debt relief options, contact the legal team at Faro Crowder, PA. We will review your individual circumstances and help you understand the best strategy for dealing with your debt.
If you are planning to file for bankruptcy protection, you may be worried about what will happen to your home. Bankruptcy law provides a debtor with numerous exemptions which safeguard assets from being included in the bankruptcy estate. Additionally, many debtors do not realize that their real estate can be positively affected by your filing.
A debtor who owns a home with more than one mortgage on it may be eligible to strip the inferior lien on it. To take advantage of the lien stripping process, you must be “underwater” on your mortgage. In other words, the value of your home must be less than what you owe on your first mortgage loan. The argument is that the home does not have sufficient equity to support the second (or third) mortgage loan, so the inferior liens should be treated as unsecured debt, which effectively strips the lien from your home.
In some cases, a debtor may be able to negotiate better contract terms with their mortgage lender. Most commonly, you can lower your interest rate or re-amortize your mortgage loan. This could result in you having a lower monthly payment which, in turn, can help you afford to keep your investment property.
If you are underwater on your home and you want to get out from under the debt, a debtor is allowed to surrender the real property back to the mortgage lender. The surrender is treated as “payment in full” because any remaining balance is treated as unsecured debt. If you file a Chapter 7, your unsecured debt is usually discharged or eliminated in full. In a Chapter 13 case, your unsecured creditors are typically paid a very small percentage, if anything, on what is owed.