Strategies for Defending your home from a Foreclosure Lawsuit
If your mortgage company has commenced a foreclosure action, there are several key strategies that can be employed to save your home.
Defend Foreclosure Lawsuit Directly in the Court of Common Pleas:
First, a homeowner can hire an attorney to defend directly against the foreclosure lawsuit in the Court of Common Pleas, located in your County, by filing Preliminary Objections, or an Answer with Affirmative Defenses. Unfortunately, this type of defense may be expensive and may only serve to delay the sheriff's sale, as opposed to saving the homeowner's personal residence.
Stop Foreclosure Lawsuit through a Loan Modification:
The second strategy is for the homeowner to apply for a loan modification. There are many factors that a mortgage company will consider to determine if you qualify for a loan modification. Some loan modification programs are government backed, and others are private, which have different qualifications. Unfortunately, when a homeowner attempts to apply for a loan modification they can feel as though the mortgage company is actually obstructing the process and they cannot make any headway. Here are the following most likely scenarios as to why a loan modification was denied: (1) failure to send requested documents; (2) did not meet government or private loan modification qualifications; (3) sheriff's sale occurred before loan modification was reviewed or approved; and (4) problems with communicating with mortgage company.
Stay Foreclosure Lawsuit and reinstate mortgage loan from default with Chapter 13 Bankruptcy:
The third strategy for a homeowners to save their residence is filing a Chapter 13
Bankruptcy in order to rehabilitate the mortgage and cure the default. This
approach works best for homeowners under the following circumstances. The typical reasons that homeowners may face foreclosure are because of an interruption in income, either due to a loss of job or increased expenses, such as medical expenses. Commonly, individuals who have overcome these obstacles, and who have found a new job, or their health has improved, may find that they now have the income to make the monthly mortgage payment again.
When they contact their mortgage company, they find that in order to cure the mortgage default they must either: (1) pay the amount owed on the entire mortgage (i.e. somehow refinance the mortgage); (2) pay the entire amount of the arrears (missed payments); or (3) make a large lump sum payment of an arbitrary amount. Obviously, most homeowners will not be in the position to meet any one of the mortgage company’s demands.
How Chapter 13 Bankruptcy helps is that it: (1) stays the foreclosure action; (2) allows homeowners in foreclosure to restart their mortgage payments; and (3) pay their arrears (missed payments) over a five year period. As we discussed above, since the homeowner now has overcome their interruption in income, they now are able to make the monthly mortgage payment, plus the payment on the arrears, in which the monthly amount would be the total missed payments divided by 60 months. A homeowner who completes this process and pays off their arrears through the Chapter 13 Payment Plan will cure the mortgage default and rehabilitate their mortgage loan. This is solely an overview and please schedule an appointment for a detailed analysis of your situation.
Please call for a free, no obligation, initial consultation with a bankruptcy lawyer to evaluate your specific financial circumstances to see if it makes sense for you to file for Bankruptcy at (610) 935-5555.
Schedule a Free Consultation or Ask a Question.
We are proud to help individuals improve their financial futures. Please contact us to schedule a Free Consultation or to ask a Question.