Louisville Foreclosures

If you have been served with a foreclosure complaint in Louisville Kentucky you only have 20 days to file an answer or a default judgment may be issued. A mortgage company will start the foreclosure when you are about 60 to 90 days overdue.   There are many different ways to handle a foreclosure but you basically will decide to save the home or allow it to go back in one of several methods which may allow you to avoid the tax liability or debt for the deficiency. Some are more profitable than others.

Louisville Kentucky Foreclosure Defense

Louisville Kentucky Foreclosure Defense

If you wish to save the home you may want to file an answer to the foreclosure and attempt a mortgage modification, or file a Chapter 13 bankruptcy and catch up the payments. Even if you wish to sell the home filing an answer and discovery will often give you time to sell the home or find another home.

Choosing a foreclosure expert.

If you wish to let the home go back you may need to delay the foreclosure so you have time to short sale the home or find another home.   Filing an answer and/or bankruptcy will normally give you the time you need to find other housing and avoid tax and deficiency problems. There are many people who offer solutions to a foreclosure problem. Everyone who is offering a solution is looking to make a profit from their answer to your foreclosure problem.

Many of these solutions are scams from people who claim to be experts. Often you can buy a badge from some agency which claims they have given training to someone who may have just gotten out of prison last week.  This is not earning the knowledge by doing thousands of cases.  It is like buying a pilots license.  You cant buy experience.   These experts may forget to tell you the downsides and the costs of their option.  They are often only looking to sell you on short sale or mortgage modification services.

Almost every mortgage company offers a mortgage modification or workout program.  But the servicer is actually charging for the services and will tack on fees to the mortgage balance in some manner.  You don’t normally need a service to do a modification or workout.

Louisville foreclosures and Short Sales

Short sales are a definite alternative to foreclosure. But you or your realtor are doing much of the work to sell the home for the mortgage company. It may take a long time to find a buyer. Often a short sale cannot be done if there are several liens like a second mortgage, judicial or tax liens who also want to be repaid. The mortgage company does not have to accept a short sale.  You may do a lot of work just to be turned down.

A short sale will have a slightly smaller effect on your credit and getting a home later.   Notice I say slightly smaller effect on your credit. Whenever you don’t pay the full amount of the debt on time it effects your credit. The short sale option is just slightly less damaging than a bankruptcy by about 25 points. Short sales often still give you a 1099 tax problem which no real estate agent can predict. The IRS requires each mortgage company to claim the tax loss and file a 1099 which may or may not cause you an income tax problem later.  The mortgage company may or may not forgive the deficiency often they require you to sign a new debt.

Louisville Foreclosure Scams

Strangers will often offer to purchase you home.   But selling your home to a stranger is often a foreclosure scam where the new person simply evicts you or charges you rent when you could have simply stayed in the home.

Foreclosure rescue companies often claim they will help and ask you to send them the mortgage payments or they will ask for a large fee. They have no ability to file documents in court like a lawyer and may send you forms to file yourself.   They rarely delay the sale anymore than the case would take if you did nothing. The home sells anyway and they may send you to a bankruptcy attorney days before the sale after they take your money.

Louisville Foreclosure Auctions

If the auction occurs you can no longer save your home in Kentucky by filing a Chapter 13. After the auction happens you can only redeem the property by repaying the purchaser what he paid for the property plus give him a small profit. The person who wins the auction owns the home from the moment the auction is over.

You must file any Chapter 13 or Chapter 7 before the auction sale or the house belongs to a new owner after the auction. If an auction has been ordered, a judgment has been entered and you have lost the lawsuit. You have a limited time to appeal a judgment after a judgment has been issued. The only option left to stop the sale after it has been sent to the commissioner is bankruptcy or asking the mortgage company for mercy. Normally they have no mercy.

Louisville Foreclosures and Bankruptcy

If you file a Chapter 7 you can delay the sale for what is often at least 4-6 months. Bankruptcy in a Chapter 7 only allows you to keep about 25,000 in equity for each person on the deed. Bankruptcy in a Chapter 13 allows you to catch up the home and you only have to repay as much as a Chapter 7 would have paid and catch up the mortgage to keep a home.

Both Bankruptcy chapters will at least stop a foreclosure temporarily and Chapter 13 allows you to permanently keep the home by catching up the mortgage.

Louisville Foreclosures and Surrendering the home

Doing nothing normally means your home will be sold. A foreclosure will keep you from getting a mortgage for 3 years. A Bankruptcy will have a smaller effect than the foreclosure but it will still keep you from owning a home for 2 years. Bankruptcy avoids the tax problems which a short sale and surrendering a home may or may not avoid.

Surrender

Simply walking away from a home does not mean you are not liable for the building code violations. Until the home is out of your name you remain liable for property taxes, lawsuits for injuries which happen on the property and building code citations.

Louisville Foreclosure options.

If you’ve been served paperwork by the Sheriff be sure to see an attorney to talk about your options. A real estate agent is not a lawyer and cannot give legal advice. The foreclosure rescue company is normally not an attorney and cannot appear in court, sue the bank back or give you legal advise. Even if they call themselves a “law group” they are not lawyers.   Google isn’t a lawyer either. A qualified lawyer should cover all of your options in a free consultation.

As time goes by you lose choices and options.   People often have a foreclosure because a disaster happened. At other times their expenses simply exceeded their income and they need a fresh start. Your duty to yourself and your family is greater than your duty to repay the bank. The bank won’t tell you how to sue the bank back. Instead the bank will only give you the choices they want you to make such as surrender the property, pay the account off or up to date.

If you have had a disaster or if your budget has more going out than coming in; then you probably need to file a bankruptcy to make your home mortgage affordable.   A short sale will not normally give you the fresh start you need if you need to cure a negative budget. Like a sinking boat which has more water coming in than going out your financial ship has to sink, if you have a negative cash flow.

Until you get a positive cash flow; even letting the home go back will not solve the financial problems you have. Bankruptcy offers you the chance to restructure your budget which other options simply can’t do. Bankruptcy allows you to keep or let the home go back while putting you into a budget where you can afford life.

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Nick C. Thompson

Nick used to work for the banks before he went to law school.He was married to the president of the Mortgage Bankers Association and worked in the state tax department as a prosecutor.He was also the assistant county attorney in Bullitt County.
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