How to Stop your Foreclosure

Stopping a Foreclosure in Louisville, Kentucky

We defend foreclosures and file Chapter 13 bankruptcy cases to stop foreclosures in Louisville Kentucky. Filing an answer and discovery in your foreclosure gives you time to do a workout, mortgage modification or have more time in the home.  You have three tools: A Chapter 7 will temporarily stop a foreclosure sale and eliminate the debt and income tax problem a foreclosure causes.  A  Chapter 13 allows you to catch up and cure the arrearage or strip a second mortgage which has no equity.  Defending the foreclosure, or bankruptcy gives you additional time to:

  • Rent the home.
  • Sell the home.
  • Attempt a mortgage modification.
  • Short sale the home.
  • Reside in the home while you search for another home or options.
  • Do a Deed in lieu and give the home up.
  • Do a workout agreement to put the arrearage onto the principle.
  • Cash for keys options may be available to pay you money to surrender the home.
  • If those items are not your goals, there are still other considerations. You may need to do a Chapter 7 or 13 to avoid tax problems and deficiency from a foreclosure.

Do not attempt to defend a foreclosure yourself. There are at least 63 different defenses that can be raised. If you don’t file these on time or properly you can lose them. The bank’s attorney and the bank employees work to profit the bank. They do not work for you. The attorney for the bank makes 250 to 350 per hour to foreclose the home and can make money from the sale of the home. The sooner you stop the foreclosure, the sooner the legal fees can be avoided. Obtain the best representation early in the case. We have been defending foreclosures for over 30 years.  

Here is our PowerPoint presentation from October 2016 for foreclosure attorneys on how to force mortgage companies to properly process a mortgage modification. NBI broadcasted this nationwide on CFPB and Regulation X requiring lenders to properly process mortgage modification applications.

Chapter 13 bankruptcy in Louisville

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Why 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. You get no notice you owe the debt after the foreclosure sale. Your wages can be garnished, bank accounts can be levied, and other property can be taken. There is no separate motion or hearing. You wake up and find; your paycheck is smaller, the bank account balance is zero, or the car is missing.  

In Indiana, under Section 32-29-7 the borrower must be personally served with a separate deficiency lawsuit. Once a deficiency judgment is entered the lender may attach wages, bank accounts, issue a judgment lien against other real estate and any personal property of the debtor.

We have seen furniture taken from a home and autos seized. Seizing furniture is rare, but it has happened.There are at least 63 different defenses which may be available. TILA, RESPA, CFPB regulations, the affirmative defenses and others may allow you to avoid a personal judgment.  

Avoid the 1099-C tax problem

When the lender charges off a debt, they are required to file a 1099-C with the IRS. The 1099 reports the deficiency as income. The amount charged off, becomes an IRS debt.  This can cause bank accounts to be seized, social security benefits to be cut and tax refunds taken. All of this can be avoided if the homeowner will file bankruptcy before the sale of the home.

The filing of a Chapter 7 bankruptcy delays a foreclosure sale and may allow the homeowner additional time to modify a mortgage.  Filing Chapter 13 will allow a homeowner to catch up  payments.  A Chapter 13 can strip a second mortgage which has no equity. A discharge under either a Chapter 13 or 7 will avoid any deficiency or tax problem. The IRS debt from a foreclosure will run about 40% of the charged off amount plus interest and penalties.

 Homeowners are not trained attorneys.  Even attorneys are not all alike.  Some are better than others.  You have too much to lose to trust your wealth to the bank and their attorneys.  They do not work for you. 

All these options allow 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.  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.

Call now to Get a Free Consultation at 502-625-0903

Delaying the decision means fewer choices

Ignoring a foreclosure or waiting too long to stop a home foreclosure is fatal. It increases the legal expenses and arrearage you have to catch up. It makes it more likely you will lose your property if you don’t defend the complaint early. You have far more choices and fewer expenses if you get help early. Waiting until a week before a home foreclosure sale means you have lost many options to avoid the sale. You have at least six different methods to avoid a foreclosure in the early stages. Our Guide to Foreclosure in Louisville Kentucky is available.

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 foreclosureEach method to avoid foreclosure has different advantages and costs. We can help. 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 bankruptcy to save your home.

bankruptcy Our Foreclosure Strategy to Stop Louisville Kentucky Foreclosures

We normally analyze a Foreclosure with the following strategy. Does the homeowner owe more than what the property is worth? If so how do we reduce it? How do we catch it up or modify the mortgage.  If a home mortgage is substantially more than a home is worth, the homeowner often needs to eventually let the house go back. Letting the home go back is often best done by filing an answer, discovery, and bankruptcy. Defending the foreclosure allows a homeowner the longest period of time in the home and bankruptcy avoids the deficiency and tax debt. If the home is worth keeping, the homeowner should either obtain a modification or catch up a mortgage in a Chapter 13.

Surrendering a home

Sometimes property may not meet the needs of the homeowner. In these cases, homeowners simply need time to find another house. During this time the Homeowner may sell the property, rent it out, or reside there until the home transfers.

Homeowners can sometimes refinance in Chapter 13, or the homeowner may obtain a mortgage modification while they are in bankruptcy. Mortgage modifications rarely leave a homeowner better off according to a study by Congress, but it does stop the foreclosure. If a homeowner has a reasonable home and mortgage, but repayment was a temporary problem they probably need to file a Chapter 13. A Chapter 13 allows homeowners to take up to 5 years to catch up a mortgage.

Servicers may not be helpful

Complicating all of this is the fact servicers are paid for every letter and phone call while the loan is in default. Servicers earn a portion of the late fees they collect. This is often 16 to 40% of your fees or payments. They also earn 16-40% of any trial modification payments they collect. The longer you are in default, the more they earn. Since the servicer earns more from loans being in default than up to date, documents are often lost, and opportunities to rehabilitate the loan are often missed. They are not working for you.  Their attorneys represent the servicers or lenders.  They don't represent you and they don't offer you advise against their interest.  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.

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