A homeowner at risk of losing his or her home to foreclosure can explore defense options by speaking with a qualified West Palm Beach foreclosure attorney. One way to prevent a foreclosure is to file for personal bankruptcy. This method is not without its risks; homeowners should consult attorneys with extensive experience in handling foreclosures and bankruptcy in Florida. It is never recommended to file a personal bankruptcy solely to stall the foreclosure process as a debtor must be filing the bankruptcy case in good faith. At the law offices of Kelley & Fulton, our South Florida attorneys can help clients use this method by filing either a Chapter 7 or Chapter 13 bankruptcy.
Delay Foreclosure with Chapter 7
The power to prevent a foreclosure with Chapter 7 bankruptcy is derived from an “automatic stay” which is included in the “order for relief” the bankruptcy court issues when one files for personal bankruptcy. With an automatic stay, lenders must cease all their debt collection activities immediately, including any scheduled foreclosure sales.
This is only a temporary fix, typically lasting three to four months while the bankruptcy is pending. The time may be shorter if the court decides to lift the automatic stay by granting a lender’s Motion for Relief from Automatic Stay.
Chapter 7 bankruptcy only discharges unsecured debts. It can forgive the homeowner’s debts like mortgages and home equity loans, but it cannot release the property lien on the home.
Stop Foreclosure with Chapter 13
For a homeowner who wants to cancel a scheduled foreclosure sale and keep his or her home, filing a Chapter 13 bankruptcy can provide the appropriate relief. With Chapter 13, not only is an automatic stay placed, but homeowners can propose a payment plan with the lender to repay the past due amount owed.
A payment plan allows homeowners to pause the foreclosure action and catch up on late payments over 36-60 months to cure the default. However, there are limitations to this approach. First, not everyone qualifies for Chapter 13 bankruptcy. Second, homeowners must have enough income to afford paying late payments and current mortgage payments simultaneously. This may be a difficult option for homeowners with long-term financial setbacks.
To discuss the best option for defending your home from foreclosure, consult with a West Palm Beach attorney experienced in both, foreclosure and bankruptcy. Learn more about the different methods of defending your foreclosure by calling the law offices of Kelley & Fulton today.