You are about to learn how to manage a foreclosure. We wont ask you to give us your email address and send you spam. You may want to download our book, stop by the office for an autographed hard copy or get it on Amazon and Barnes and Noble. Take an hour or two to follow the below information step by step to save your home or fight your foreclosure. We only take cases in Kentucky and Southern Indiana. We can file an answer to your foreclosure to give you additional time to do a work out or modification with your mortgage company or you can file a Chapter 13 bankruptcy to catch the payments over time. Either method will avoid or stop a Kentucky foreclosure. Defending a foreclosure will allow you substantial extra time in the home to:
- Rent the home
- Sell the home
- Attempt a mortgage modification
- Short sale the home
- Reside in the home
- Do a Deed in lieu and give the home up
- Do a workout agreement to put the arrearage onto the principle
- A cash for keys option may be available to pay you money to surrender the home.
If those items are not your goal you should still either or also:
- Do a Chapter 13 to catch up the payments or strip away a second mortgage that has no equity
- Do a Chapter 7 to avoid the tax problems and deficiency of a foreclosure
- Obtain a mortgage modificiation. Here is our PowerPoint presentation we did October 2016 for foreclosure attorneys on how to force mortgage companies to deal with you properly. NBI broadcasted this nationwide on the rules under the CFPB and Regulation X requiring them to properly process your mortgage modification application to prevent Foreclosure..
Why it is important to avoid a default personal judgment.
When a homeowner is served with a foreclosure the home rarely sells for enough to pay the mortgage. In Kentucky under KRS 426 the deficiency judgment is entered automatically if the sale proceeds are not sufficient to cover the debt owed. In Indiana under Section 32-29-7 the borrower must be personally served with a deficiency lawsuit. Once the deficiency judgment is entered the lender will normally attach wages, bank accounts, issue a judgment lien against any other real estate and any personal property of the debtor. We have seen furniture taken from a home and autos being seized. Seizing furniture is rare but it has happened. When the lender charges off the debt a 1099-C is turned into the IRS to report the deficiency as income. The amount charged off becomes an IRS debt that may reduce social security benefits and tax refunds. All of this can be avoided if the homeowner will file bankruptcy prior to the sale of the home. Additionally the filing of a Chapter 7 bankruptcy will delay a foreclosure sale and may allow the homeowner to modify a mortgage more easily. The filing of a Chapter 13 will allow a homeowner to catch up the payments or may allow the stripping of a second mortgage. A discharge under either a Chapter 13 or 7 will avoid any deficiency or tax problem.
All of these options will allow you extra time in the home to sell it or live there. Please beware of Rescue scams claiming to help you stop a foreclosure in Louisville, KY and here is a general timeline of the foreclosure process and the Newsweek article about when it is time to walk away instead of defending the foreclosure. Here is the HAMP program showing what is required in the HAMP guideline.
Ignoring a foreclosure or waiting too long to stop a home foreclosure is fatal. It increases the legal expenses, the mortgage company charges you, and chances are you will lose your property in foreclosure by a default judgment if you don’t defend against the complaint. If you get legal help pre-foreclosure, you have far more choices and less expense. Waiting until a week before a home foreclosure sale means you only have one or two ways to avoid the sale. If you get help when you get the pre-foreclosure letter from the mortgage company you, have at least six different methods to avoid and stop your home foreclosure. The Guide to Foreclosure in Louisville Kentucky is here. To stop a home foreclosure you can see each section in our manual for explanations of how to:
- Get a new house loan (there is help in some cases and at prime rates)
- Pre-Foreclosure Mortgage Workouts
- a Chapter 13 Bankruptcy can strip a second mortgage
- Short Sale or Straw Purchases
- Deed in Lieu of Foreclosure
- Fight the foreclosure
Each method to avoid foreclosure has different advantages and costs. We can help to do each properly. We are happy to give you a free foreclosure consultation in our office to discuss what can be done to avoid your foreclosure.
If you have had a lawsuit filed against you then seek an attorney immediately to answer the lawsuit or file a bankruptcy to save your home. If you have a foreclosure lawsuit filed against you this is the link to the state of Kentucky’s stop foreclosure website.
Our Foreclosure Strategy
We normally analyze a Foreclosure with the following strategy. Does the home owner owe more than what the property is worth? If so how do we reduce it? If a home mortgage is substantially more than a home is worth, the home owner often needs to eventually let the house go back.
After the auctions the homeowner owes the deficiency and is often left with a tax debt from a 1099-c filed by the lender for the deficiency. If the home sold prior to 12-30-2013 there may not be a tax for that debt due to the Mortgage Forgiveness Debt Relief Act. But if a home sells after 12-30-2013 the homeowner is hit with a deficiency and an income tax bill unless he files a Chapter 7 or Chapter 13 bankruptcy prior to the sale.
An attorney can eliminate and strip off a second residential mortgage by filing a Chapter 13 if there is no equity for the second mortgage. But laws prevent homeowners from modifying 1st residential mortgages in Bankruptcy leaving a homeowner only the option of abandoning the home to foreclosure or paying more than what the home is worth. Commercial property and vacation homes can have 1st mortgages modified. You can litigate what was done in servicing, closing, fees, costs, transferring and other issues in a Chapter 13. But normally it is an on/off decision to keep or let a home go based on whether it is a good or bad deal.
Sometimes property may not meet the needs of the home owner. In these cases, homeowners simply needs time to find another house. A homeowner may want to file an answer to the mortgage and later file a Chapter 7 to delay the foreclosure process while looking for another home. Filing an answer to the Kentucky foreclosure may give a homeowner months or years in the home rather than allowing the mortgage company to rush the foreclosure through by default. During this time the Homeowner may sell the property, rent it out, or reside there until the home transfers which may be months after the commissioner sale.
If you have a high interest rate you may still need to let a home go back unless you can refinance to a lower mortgage rate. Homeowners can sometimes refinance in a Chapter 13 or the homeowner may obtain a mortgage modification while in a Chapter 13. However Mortgage modifications rarely leave a homeowner better off according to a study by congress. Instead mortgage companies normally benefit banks by temporarily lowering mortgage rates, and stripping away the equity in modifications. The best answer is to either abandon a home if a mortgage rate is too high. Mortgage modification is rarely an answer. Few people obtain modifications. If a homeowner has a reasonable home and mortgage but repayment was a temporary problem and only needs time to catch up payments they probably need to file a Chapter 13 which can allow homeowners to take up to 5 years to catch up a mortgage.
Complicating all of this is the fact that mortgages are serviced by a servicer that is paid for ever letter and phone call. Since the servicer earns more from loans being in default than up to date, documents are often lost or opportunities to rehabilitate the loan are often missed. If you are in a foreclosure call us 502-625-0905. Please like us on Facebook, Google Plus, Twitter or LinkedIn and help spread the word.