Homeowners in distress and in jeopardy of losing their homes need all the tools they can get access to in order to save their homes from foreclosure and bring the mortgage lender to the bargaining table in the loan modification process. One of those tools is the filing of a bankruptcy when necessary.
Bankruptcy should always be used as a last resort after other avenues of trying to work with the lender or loan servicer have not produced positive results. It is a powerful weapon against the foreclosure process and stops any foreclosure dead in its tracks. Once the bankruptcy is filed, under federal law, the foreclosure is automatically stopped immediately. Therefore if a foreclosure sale is scheduled the next day, or within the next hour for that matter, the sale is automatically stopped.
The power in this is that it brings to a halt the whole foreclosure process and gives the homeowner some breathing room and ability to negotiate a loan modification with the lender who now faces the possibility of having to wait several more months before anything can be done regarding the home.
In addition, under the federal bankruptcy rules, if the homeowner has a second trust deed the law allows for the second trust deed to be completely stripped from the debt of the homeowner. That means the second trust deed just disappears. It never has to be paid.
If the lender committed any violations of the lending laws such as the Truth in Lending Act (TILA) or Real Estate Settlement and Procedures Act (RESPA) – these will be explained in another blog- the bankruptcy filing homeowner can also file within the bankruptcy court what is called an adversary proceeding. This type of case is the same as filing a claim in the state court or other court proceeding making claims that the lender violated a law or committed a fraud. The power in taking this steo is it more often times than not brings the lender to the bargaining table to negotiate a loan modification, which is the ultimately goal of most homeowners experiencing foreclosure.
Finally, if the lender agrees to modify the loan while in bankruptcy, the homeowner, should he or she chooses, can then voluntarily dismiss the bankruptcy without fear of losing the home or can continue with the bankruptcy to deal with other debt in an appropriate manner.
The ends and outs of this process can be obtained Free. Contact us at www.landerslaw.com for details. I hope this information is helpful and would appreciate your comments.