Are you facing foreclosure? It can be difficult to know where to start and what options you have. Why face the uncertainty alone? Our Foreclosure Defense Lawyers are ready to help you navigate your options. Their extensive experience will be critical in ensuring you are taking the best steps to protect against losing your home. A free consultation is an easy way for us to show you just how our foreclosure lawyers can help you. Submit a free consultation form today to get started.
COVID-19 has brought a new realm of challenges and policies. Because of COVID-19, there have been several changes, including new legislative acts that have been made throughout the United States and in the State of New York.
As a direct result of the financial toll COVID-19 has placed on many New Yorkers, Governor Andrew Cuomo of the State of New York signed an Executive Order extending foreclosures through January 1, 2021. This means that commercial tenants and mortgagors have additional time to catch up on their mortgage, rent, and the like to avoid a foreclosure from moving forward.
Additionally, the President of the United States issued an Executive Order expressing a new policy of the country to minimize residential foreclosures during the COVID-19 national emergency. This granted the Secretary of Housing and Urban Development the ability to take action and help homeowners avoid foreclosure resulting from hardships caused by the pandemic by providing assistance to minimize foreclosures.
Can You Stop a Foreclosure?
Can you stop foreclosure once it has started? When facing foreclosure, you need to know how to stop foreclosure proceedings and oftentimes how to stop foreclosure at the last minute. There are several ways to stop foreclosure immediately. Some strategies include filing for bankruptcy, doing a loan modification, selling your home, deed in lieu of foreclosure, and reinstating a loan. It is important to consult with a Foreclosure Defense Lawyer to determine which strategy is best for you.
How to Stop Foreclosure: Filing for Bankruptcy
Bankruptcies are typically filed under either Chapter 13 or Chapter 7 bankruptcy. There are some important differences between Chapter 13 and Chapter 7 bankruptcies, especially when it comes to what happens to your property. Additionally, there may be risks associated with these which should also be explored.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a reorganization bankruptcy for people who make too much money to qualify for Chapter 7. Under Chapter 13, a debtor can keep all of their property if they pay back all or some of their debts through a repayment plan. This means that with Chapter 13, none of your assets are sold when you file. The repayment plan is specific to the debtor’s income, debt, and expenses. This works well for debtors with regular income that have funds to pay back some of their debts each month.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy. Certain income requirements must be met to file for Chapter 7. Under Chapter 7, most general unsecured debts are wiped out without needing to pay them back. This means that with Chapter 7, most of your property will be sold and used to pay off your debts. An “automatic stay” is applied when Chapter 7 is filed which prevents creditors from collecting. This works well for low-income debtors with minimal assets.
The Risks of Bankruptcy
There are risks associated with filing for bankruptcy, especially if it is not done right. One big risk of bankruptcy is loss of property. The risk here is that after bankruptcy is filed, you do not want to be surprised by a turnover request for property you did not realize you would lose by filing. Another risk is denial of discharge which occurs when a material fact is omitted. This can happen even if it’s one single omission of material fact. Another risk is not realizing that a debt you have is a non-dischargeable debt.
Although bankruptcy is not extremely risky if it is done right, it can be a difficult process to navigate for someone who does not know the intricacies of the field. It is important to get the advice of a foreclosure lawyer to ensure you avoid these risks.
Stop Foreclosure with a Loan Modification
A loan modification can help stop foreclosure from proceeding. This occurs when an agreement is reached between you and your mortgage company to alter the original terms of your mortgage. Usually when this modification occurs, you can reduce your monthly payments to an amount that would be more affordable according to your budget. Other terms that may be changed besides payment amount include length of the loan and the interest rate. This option can give you a new start on more favorable terms while allowing you to avoid foreclosure.
Dual tracking occurs when a mortgage company is both negotiating a loan modification while they are also proceeding with a foreclosure action against you. This is oftentimes a prohibited practice which could be used to your advantage. This can stop a foreclosure in its tracks. It may also be the basis of a lawsuit.
How to Stop Foreclosure Process by Selling the Home
Selling the home is another way to avoid foreclosure. The earnings from the sale are then used to pay back everything you own, including any additional fees. Although you will be selling your property, the disadvantages that come with a foreclosure can be avoided. However, the other options may be more attractive for those trying to figure out how to stop foreclosure and keep your home.
Selling the House
When selling the house, people may try to net what they owe so a foreclosure can be avoided. Once you decide to sell, the lender should be notified that you intend to sell the property in an effort to pay off the mortgage. Lenders can postpone the foreclosure sale or auction so you have the chance to look for a buyer and sell the home. This all may depend on the value of your home.
Short sales avoid foreclosures as well. In short sales, the home is sold for less than what you owe. Lenders may agree to these because there are certain burdens that come with foreclosures that they may want to avoid. Although they don’t want to lose money, the time and money they would spend on the foreclosure process may make a short sale more attractive.
Deed in Lieu of Foreclosure to Stop Foreclosure Now
A deed in lieu of foreclosure is a document which transfers the title of a property from the owner to the lender in exchange for the mortgage debt being relieved. This can stop a foreclosure. It gives the lender back the property in exchange for a release of obligations under the mortgage. Both sides must be in agreement.
Advantages and Disadvantages
The main advantage is that it releases you from the burden of the loan. It allows you to stop the foreclosure in its track, which in turn avoids the negative effects of a foreclosure. Importantly, it can avoid the negative impact to your credit score. The costs, time, and length of the foreclosure process can be avoided by doing a deed in lieu of foreclosure. This strategy can also keep the matter more private since it avoids the public visibility of a foreclosure once a notice of default is entered.
The main disadvantage is the loss of property that comes with this agreement. Because you will not have your property anymore, you will likely have to relocate.
How Do You Stop a Foreclosure by Reinstating the Loan?
There is a reinstatement when the owner brings one payment that makes the delinquent loan current. This stops a foreclosure because it allows the owner to catch up on payments. The loan is then reinstated, and the owner at that time continues on with making normal, regular payments.
Reinstatement vs. Payoff
A payoff differs from a reinstatement. With a payoff, the owner pays the total amount needed to completely satisfy the loan. This is akin to a balloon payment since it is a large, one-time payment at the end of the lease term. It also serves to stop a foreclosure since the loan is then paid in full and any debt is satisfied.
Additional Ways to Stop Foreclosure Immediately
In addition to those strategies previously mentioned, there are other ways to stop foreclosure immediately.
Negotiate with your Lender
You may be able to negotiate directly with your lender and work out some sort of agreement which allows you to avoid foreclosure. It is important to know what you are agreeing to in these negotiations, and what to ask for.
A mortgage forbearance can allow you to pause your mortgage payments for a certain amount of time. With the hardships COVID-19 brings, a lender may be willing to agree to this during the pandemic.
Lease or Assumption Option
A lease assumption allows a person to take over the lease from you. It transfers lease obligations to someone new, so that person replaces you. It frees you from your responsibilities. A mortgage assumption transfers a mortgage from a seller to a purchaser of property. The buyer adopts the mortgage and takes over any payments and obligations that come with the mortgage.
File a Lawsuit
Another possible strategy for stopping a foreclosure is to file a lawsuit. These can be based upon a variety of things depending on the specific facts of your case. This judicial option may be the right strategy for you.
Getting Help from a Foreclosure Attorney
The foreclosure process can be long and tenuous. You may not realize that you can stop the foreclosure from happening. Get help from a Foreclosure Defense Attorney who has extensive experience stopping foreclosures in their tracks. Contact us today for a free consultation.