In Louisville, Kentucky, the foreclosure process moves very quickly without an effective foreclosure defense. Lenders sometimes sell properties within as little as 90 days. In addition, the bank has an attorney who is paid hundreds of dollars an hour. Unfortunately, these legal fees inflate your mortgage balance. That attorney also has years of legal training and experience you don’t have. Also, this attorney only advises the bank which means he won’t advise you how to avoid foreclosure. The bank wants to maximize their profit from the mortgage or foreclosure. So, their attorneys are not paid to benefit you. Instead, you must take a moment to make a financial decision and ask your self if it’s more profitable to keep the home or to let it go back. If it is better to keep it, then consider a Mortgage Modification or a Chapter 13.
Chapter 13 and Mortgage Modifications to Avoid Foreclosure
If the home sells in foreclosure, FHA VA and other programs will prevent you from having another mortgage for 3-7 years. However, you aren’t defenseless and have legal defenses to take that slow the process. Delaying the process gives you more time to find other solutions. But, you have to make the right decisions early or you lose rights and agree to the sale. We help by sitting down with you and finding a strategy.
If you want to save the home, you can catch up on the mortgage in Chapter 13. But if you wait too long, the foreclosure expenses mount up and may cut off your ability to save the home. By failing to take some defenses or actions, you waive your rights to them permanently. By waiting too long, Chapter 13 becomes more expensive to the point you can’t’ afford a Chapter 13. Modifications also cure the foreclosure, but the success ratios are low unless you sue the mortgage company back or file bankruptcy.
⎆ Kentucky foreclosure defenses.
It’s our job to point out the mistakes the lender made during the foreclosure process. There are procedures the lender has to go through closing the loan, processing the mortgage, filing the mortgage, in the pre-foreclosure process, and during the foreclosure.
- Mortgage servicers and holders must give you a fair chance to correct the loan default.
- The plaintiffs must prosecute the foreclosure in the name of the real lender or holder.
- Mortgage servicers and holders must introduce the original documents in the foreclosure proceeding.
There are at least 64 different defenses that may be available to avoid foreclosure. You have a right to insist the lender accurately present the evidence in court and follow the proper foreclosure procedures. This will slow down a foreclosure. Some lenders have to dismiss their cases and start completely over. The additional time may allow you to catch up before the foreclosure can continue. This time may allow you the time to find another home, obtain a mortgage modification, forbearance, or sell the property. In may be necessary to file a bankruptcy to avoid the tax liability, deficiency judgment, and filing bankruptcy will also delay the foreclosure.
⎆ A Chapter 7 or 13 bankruptcy stay avoids foreclosures.
At the start of Chapter 7 or Chapter 13, a temporary court order called a stay goes into effect that prevents collections and seizure of your property. If you correctly complete the bankruptcy, you usually get a permanent court order called the discharge. The discharge order permanently protects you. Filing bankruptcy automatically stops a Louisville Kentucky foreclosure unless you are filing a second Chapter 13. Even if you are filing a second case within a year, you can ask for an extension of the stay for good reasons. Every answer, discovery, or bankruptcy that is filed typically delays the foreclosure at least six months. Most of the CFPB protections have been watered down since 2016, but the foreclosure process still takes time.
The lifecycle of the foreclosure process timeline is as follows:
- The lender files a foreclosure complaint, and within 20 days, the debtor must answer or default is entered. Generally, by simply filing the answer, the foreclosure takes about six months. A proper response also requires the lender to respond to defenses and counterclaims in your answer.
- Within 30-45 days after the debtor files answer, the homeowner must file discovery. By submitting a proper discovery, it forces the lender to take the time to respond to the requests. This typically adds about six more months to the process.
- Before the sale, if a defendant homeowner files bankruptcy, the process takes an additional six months or longer. If a couple owns the home, bankruptcy may be filed in the husband’s name. Then, a second bankruptcy files in the wife’s name later when the home again comes up for sale. Chapter 13 delays the sale much longer if you make payments and may eventually cure the foreclosure.
⎆ Motions to terminate the stay.
In Chapter 7 or 13, the Mortgage company might ask to set aside the stay. But, obtaining that permission takes over 30 days, and it is expensive. Often the lender waits until after the Chapter 7 bankruptcy discharges. This ensures that Chapter 7 will delay a sale for 6 months.
If you don’t make payments in the Chapter 13 plan, the mortgage company files a motion to terminate the stay. To remain in bankruptcy, the homeowner must catch up on these payments plus pay the attorney fees for the bank and filing fees. Unfortunately, this will often cost over $1,000 dollars. Therefore, make it your priority to make the mortgage payments on time if you are in Chapter 13.
Chapter 13 allows you to catch up on the mortgage and permanently save the home. You can take up to 5 years to catch the mortgage up, but the earlier you choose this option, the less expensive it is, and it’s also more likely to save the home. In fact, most people plan a creative combination of these.
If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.