Life is full of stressful moments. Many of those moments relate to money. How will I pay for school? How will I pay these doctor bills? How will I get my car fixed? On any list explaining the “top reasons people get divorced,” you will find “money” or “financial issues.” That’s just a reality. Money, or a lack of money, is stressful. I am not going to give you a “top ten” list or some hierarchy of life’s stressful moments, but I am confident in this statement: There is a special brand of stress reserved for when someone fears that they are about to become homeless. On our basic list of needs, a roof over our heads is pretty high. That is where the topic of foreclosure comes in.
What is Foreclosure?
Let’s start with word “foreclosure” so we know what it means. For purposes of this conversation, let’s assume that you own a home or condo, subject to a mortgage that you pay every month. Yes, there are different kinds of mortgages with different payment schedules, but we’ll keep it basic for these purposes. Ok, at some point you miss a few payments. Maybe you got sick, lost a job, or your adjustable rate mortgage went up to where you can no longer afford it, or something else happened. Whatever the reason, you are now behind on your payments. While there is no magic number that applies to all mortgage companies, once you’ve hit the 90-day mark without making a payment, things will start to escalate. Your mortgage company will send you letters explaining your rights. These letters are really warnings of what is to come and they are required to be sent before the foreclosure process can begin.
After the mortgage company sends their warning letters, and payments still are not made, a lawsuit is filed in the circuit court in the county in which you live. This lawsuit is often known as a “Lis Pendens” or a “foreclosure action.” When this lawsuit is filed, the foreclosure process has begun. You are now “in foreclosure.” This means that the mortgage company will be requesting a judge to sell your home at a public auction. Now would be a pretty good time to retain an attorney if you have not already done so.
During the foreclosure process, there are a variety of ways to save your home. Most often, a borrower will try to work out what is known as a modification to bring them current on their mortgage loan. This can be very frustrating and time consuming. I strongly recommend having an attorney guide you through this process. Towards the end of the foreclosure process, that public auction sale that I mentioned earlier will be set. If you are already at that point, circle that date on your calendar with red ink. That is the day that someone is going to buy your house right out from under you if you do not act!
The court is going to sell my house! What can be done?
If that date is looming, remember that you are holding one last Ace in your hand to play. A bankruptcy, even if filed JUST before sale date, can stop a foreclosure sale. We have filed bankruptcy petitions literally moments before the sale, and been able to help our clients stay in their homes. So how does that work? Many years ago, it was explained to me that once a bankruptcy is filed, every civil court action, with very limited exception, in which you are involved in gets “frozen” for a while. No one can file anything, or prosecute those cases, until a judge says so. What puts your foreclosure case “on ice” is known as the Automatic Stay provision (1). When you file a bankruptcy, the Automatic Stay provision not only prevents the mortgage company from getting your house from you, but also allows you time to save your home using the bankruptcy laws. This can be in one of two ways. First of all, you can catch up on the amount you are behind on your mortgage, the “arrearage,” and you can take up to 5 years to do it (2). Once the arrearage is resolved, you are considered to be current with your mortgage company and your foreclosure gets dismissed. The second way to save your home with a bankruptcy involves mediation. While not offered everywhere, The United States Bankruptcy Court, Middle District of Florida, offers a Mortgage Modification Mediation Program, whereby a bankruptcy judge will order a representative of your mortgage company to attempt to modify your loan (3).
Who can help me with this?
If that special brand of stress reserved only for the fear of impending homelessness has crept into your life, and the foreclosure process is a reality, then the time to act is now. You have hope! It never costs you anything to call our firm to find out how the bankruptcy laws might help with your particular set of circumstances. We have helped countless people in your shoes, wondering how they might hold onto their homes. You can do this, but you cannot do it alone. Call Berkowitz & Myer today to learn more. We are ready to help you.
(1) 11 U.S. Code 362
(2) Section 1322 (e) – Bankruptcy Code