February 08, 2013 /24-7PressRelease/
-- Bankruptcy options for homeowners facing foreclosure
Article provided by Michael J. Logan, Ltd. Visit us at http://www.mikeloganlaw.com
The economic downturn has hit many homeowners hard, causing thousands of hard-working people to fear losing their homes to foreclosure. Fortunately, there are some legal options that can help stop a foreclosure. Chapter 7 and Chapter 13 bankruptcy are just two of the options, in addition to a homeowner's foreclosure rights.
A homeowner who is served a notice of foreclosure has a right of reinstatement. This means that a homeowner who falls behind with mortgage payments has the right to catch up on all his or her missed mortgage payments. If a homeowner is financially able to catch up, the homeowner can prevent the foreclosure by making the necessary payments within 90 days from the date when the homeowner is served a notice of the foreclosure action. The homeowner will also need to pay the lender's court costs, attorney fees and other late charges.
If a judgment of foreclosure is already entered, the homeowner can try redemption instead of reinstatement. A homeowner's right of redemption means that a homeowner can reverse a foreclosure judgment by paying off the entire balance of the mortgage loan. Illinois law requires the homeowner who wants to exercise the right of redemption to do so within three months after a judgment of foreclosure is entered or seven months after the homeowner received a notice of foreclosure, whichever is later. This redemption ends prior to the foreclosure sale.
A homeowner's rights to reinstatement and redemption are just two of the options that can be used to defend against a home foreclosure. Prior to a foreclosure, homeowners can also pursue other options including refinancing the mortgage loan, getting a modification to the mortgage loan and selling the home through a short sale. In addition, filing bankruptcy can help some homeowners delay or entirely stop a foreclosure.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is used to discharge most types of an individual's debt. Unfortunately, secured debts, such as a mortgage loan, can't be eliminated through a bankruptcy unless the homeowner is willing to surrender the property to the lender. However, filing Chapter 7 bankruptcy can help homeowners through the imposition of an automatic stay. Immediately after filing a Chapter 7 bankruptcy petition, the court issues an automatic stay, which prevents creditors from taking any action to collect debts -- including foreclosing on a home.
During the bankruptcy proceeding, this can allow the homeowner to continue living in the house. In most cases, the homeowner will lose the house when the Chapter 7 bankruptcy completes. In rare cases, however, the homeowner may save the home even after filing for Chapter 7 bankruptcy. For example, if the homeowner has already paid off most of the loan and the remaining balance is low, the homeowner may avoid losing the home even after filing for bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is often used by homeowners to prevent a home foreclosure. During a Chapter 13 bankruptcy, an individual completes a court-approved payment plan, which can incorporate a home mortgage, over the course of several years. The court arranges the homeowner's repayment plan to make it more manageable, and the homeowner still continues to pay off most of the debts. If the homeowner completes the repayment plan, most of the homeowner's remaining debts will be discharged and his or her home will be saved and mortgage-free.
To see what options best suits the homeowner's foreclosure situation, the homeowner may want to consult with a local debt relief attorney. All case assessments are confidential and designed to alleviate the stress associated with financial burdens.---
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