The prospect of foreclosure can be overwhelming for any homeowner. Financial stress can happen to anyone at any time. The coronavirus crisis caught many people off guard. Any homeowner who lived from paycheck to paycheck and suddenly lost their job found it challenging to make their monthly payments.
Missed payments are just the beginning of a financial situation that no one wants to experience. The easiest way to stop foreclosure at the last minute is to keep your home loan current. If you are facing foreclosure proceedings, there are several ways to stop foreclosure immediately..
Ways To Stop Foreclosure Immediately
A borrower must take immediate action to stop the foreclosure process. The first step is to meet with the mortgage company to discuss the possibility of forbearance or a repayment plan and loan modification. Refinancing might allow you to pay past-due mortgage payments. Doing this as soon as possible is essential so it will not damage your credit score.
Your lender may not approve a loan modification. If they do not, you should consult a foreclosure attorney. Foreclosure lawyers are knowledgeable about state law when it comes to foreclosure prevention.
Homeowners should have the support of a law firm that specializes in how to stop foreclosure when they are facing the court system. Foreclosing on a house takes a long period of time, and the lender must follow several legal requirements.
A foreclosure attorney will determine if the mortgage lender has followed the rules of the foreclosure process. The borrower might be entitled to reinstatement if they have missed any requirements. This means that they have the chance to pay the arrears.
You can also call your bank and see if they will allow a short sale. This is when a homeowner sells their home for less than it is worth. There are many cash home buyers in Texas, and you can sell a house in Arlington quickly. If you are not interested in staying in your home, this can be an easy way out of foreclosure.
Another option is to offer the deed in lieu of foreclosure. You hand over the deed and take the loss of any equity you have built in the home.
Declaring Bankruptcy
Some people see declaring bankruptcy as a last resort, but sometimes it can save someone from financial ruin. Once you have filed for bankruptcy, all creditor action against you has to stop. That means no more stressful phone calls about outstanding debt and that any foreclosure and repossession action will stop.
Bankruptcy will not solve all your problems, but it will give you some time to find a solution. Depending on which type of bankruptcy you choose, you may be able to discharge most of your debt. Another option is to formulate a repayment plan that allows you the time to catch up on your outstanding debt.
In both cases, you may be able to avoid the foreclosure of your home. You must stay current on your monthly mortgage payments and negotiate a plan to repay any arrears for any missed payments.
If this doesn’t sound like an option for you, you can learn how to sell a house with a mortgage. We buy houses Wichita Falls and many other locations.
Chapter 13 vs. Chapter 7 Bankruptcy
Filing for bankruptcy is one option for stopping foreclosure on your house. The types of bankruptcy for avoiding foreclosure are chapter 13 and chapter 7, and you will have a record of bankruptcy on your credit report.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most commonly filed bankruptcy in the U.S. Homeowners who file chapter 7 bankruptcy will have to sell some of their property to pay off debt. However, state and federal bankruptcy exemptions protect most of their property.
Once you file bankruptcy, all creditor action must stop. You will no longer be responsible for your outstanding and unsecured credit card debt, and you will be able to maintain any property where you can make payments.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy might be your only option if you cannot qualify for chapter 7 bankruptcy because you are earning too much disposable income. Ironically, you may be making too much money to file for chapter 7 bankruptcy. This means you have sufficient cash flow to manage your debt, but you may need a little extra time.
Chapter 13 bankruptcy is a legal way to earn more time to repay your debt. Once you file for chapter 13 bankruptcy, all creditor action will stop, and you will have to negotiate a payment plan to pay off your debt over three to five years.
Chapter 13 bankruptcy can give homeowners the time to get caught up on their bills while maintaining their property. This type of bankruptcy will place an automatic stay on debt collection, such as foreclosure and repossession.
Filing a Lawsuit To Stop the Foreclosure
A homeowner can file a lawsuit to stop foreclosure if they have exhausted every other avenue. Once you have received the notice of sale, you must consult a foreclosure lawyer about the best way to save your home.
A homeowner can sue their lender if they have not adhered to the foreclosure laws in Wichita Falls.
For example, suppose the lender illegally sends a notice of sale or initiates a foreclosure sale without following the requirements.In that case, an experienced lawyer can prove that the lender has broken the law, which will result in an automatic stay, which means the foreclosure process will stop.
Often, the lawsuit will not make it to court. The foreclosure lawyer and the lender will negotiate a deal which is called mortgage litigation.
Foreclosure Laws in Wichita Falls
A lender must follow foreclosure laws in Wichita Falls to foreclose legally. Once you have missed several mortgage payments, the lender will send you a letter requesting payment, a notice of default.
Federal law requires that a lender contact the borrower by phone within 36 days of a missed payment. The purpose of this call is to discuss loss mitigation options. Within 45 days, the lender must provide loss mitigation options and assign personnel to help you through the process, referred to as pre-foreclosure.
The U.S. Department of Housing and Urban Development (HUD) can recommend an approved housing counseling agency. A housing counselor can advise you about forbearance, foreclosure, and credit issues.
Typically, the lender will wait until the loan payments are 120 days late before initiating foreclosure proceedings. Non-judicial foreclosure is not permitted in Wichita. The lender must file suit in court, and you will be given notice with a summons and complaint.
When a homeowner does not answer the suit, the lender can get a default judgment which allows for a foreclosure sale.
When a homeowner does answer, there will be a litigation process, and the judge will decide whether the foreclosure will proceed or not. They can determine a sale date for a foreclosure auction.
Modifying Your Loan
Homeowners can ask their lender about modifying their loan. A loan modification allows the borrower to refinance the terms of the loan. It may be possible to extend the terms of the loan, or the lender may agree to monthly mortgage payments that you can afford.
You may get a deferral agreement that will add your arrears to the end of your loan, or you can negotiate a monthly repayment plan.
Some lenders will refuse a loan modification if you are having financial difficulty. Another option is to consult with a private lender and see about a short-term loan, a temporary fix that may stop foreclosure. Unfortunately, a short-term loan will cost you dearly with a very high-interest rate.
Homeowners should be aware that dual tracking is not allowed. Dual tracking means a lender cannot continue with the foreclosure process when considering an application for a loan modification. Once you submit a loan modification application, the lender must refuse it before proceeding with foreclosure.
Seeking Legal Advice
Facing foreclosure is a highly stressful time, and most people will face circumstances that make it difficult to honor their financial obligations. Whether it is the loss of a job, illness, or a natural disaster, paying all the monthly bills sometimes becomes impossible.
You should consult a foreclosure attorney to ensure that someone protects your interests.
An experienced attorney can guide you through the foreclosure process and help you make the best decisions for your financial situation. If you decide to file a lawsuit or opt for mortgage litigation, an experienced foreclosure lawyer will get the best results.
Final Thoughts
You have several choices when it comes to saving your home from foreclosure. You may feel like the world is against you, but you can find help. Once you choose the right solution, you may find yourself in a healthier financial situation.
It would help if you remembered that you cannot procrastinate when facing foreclosure, and you should call your lender and negotiate an agreement before the situation worsens. If all else fails, contact a foreclosure lawyer that can guide you through the process. Hiring a lawyer may be too expensive, but it will be a wise investment if it means saving your house.