Sultana L. Haque-Bolet
Attorney & Counselor at Law
Sultana L Haque-Bolet
Freezing Foreclosures – How Does It Affect You?
Sultana L Haque-Bolet says if you’ve read about the halting of foreclosures by some major lenders, you may have questions about what these actions could mean for consumers, including those considering bankruptcy.
Evidence continues to show that some lenders mishandled documents by signing them off without proper review, a process now dubbed as “robo-signing”. These mistakes not only broke the law, but led to massive amounts of foreclosures.
You may be wondering what the foreclosure halting means to a homeowner who lost a home to foreclosure. Original homeowners will likely be compensated with monetary damages as opposed to being able to re-take the house, as this is much easier process for the courts to oversee.
In the rare instance that a foreclosure victim wants and can get the house back after a new buyer has already moved in, the new buyer will likely be compensated by title insurance. But if the original homeowner still does not have the funds to catch up on the mortgage, the lender will most likely restart the foreclosure process.
Some consumers wonder if declaring bankruptcy will save their homes from foreclosure. Filing a bankruptcy triggers an automatic stay, or halt, that stops all creditors from trying to collect their claim including foreclosure.
However, in a Chapter 7 bankruptcy, known as liquidation, this stay only lasts as long as the trustee (person appointed to oversee your bankruptcy estate) does not abandon the property as either valueless to the estate or as exempt, or until the case is closed.
For people wishing to claim their homestead as exemption, they would lose the automatic stay and the creditor would be able to continue the foreclosure process.
In contrast, in a Chapter 13 bankruptcy case, known as reorganization, the stay lasts as long as the case is pending. Chapter 13 bankruptcy is designed to allow debtors to cure defaults in their home and mortgages by paying the arrange over as long as three to five years. Current law does not allow a bankruptcy to modify a debtor’s principal residence mortgage.
Taking an honest look at your financial situation can be challenging and emotional. But if you stay educated about your options, you will be better equipped to protect yourself and those you love. I’m here to help you take a proactive approach. If you think that you need my help, please
Call Sultana L Haque-Bolet at 407-545-2099.