In the aftermath of COVID-19, the number of foreclosure suits are expected to increase in Miami Dade County and around South Florida. In order for homeowners to properly protect themselves, understanding last-minute strategies to avoid foreclosure will be extremely beneficial. Our Miami foreclosure defense attorneys are here to explain each alternative so that our clients can be adequately prepared.
Filing for Bankruptcy
If a foreclosure sale is set to proceed within the next few days, homeowners should consider filing for bankruptcy. An automatic stay will immediately go into effect, stopping debt collectors from foreclosing on the home. No other foreclosure activity can proceed once this injunction is put into place. The bank will most likely attempt to overturn the automatic stay by filing a motion for relief, where the court can decide whether or not a foreclosure can proceed. If it is granted, foreclosure plaintiffs are at least given around one month to explore different alternatives with the hopes of arranging a mortgage loan modification with the bank.
Types of Bankruptcy
Depending on the homeowner’s goal, Chapter 7 or Chapter 13 bankruptcy can both halt foreclosures from proceeding.
Chapter 13 bankruptcy is most suitable for those facing foreclosure but looking to stay in their homes. It allows homeowners to restructure their debt under the condition that at least a portion of the overdue payments will be satisfied within a three to five year period. The foreclosure can possibly be avoided as mortgage indemnities are included in this type of bankruptcy repayment plan. Typically, only a portion of the unsecured debt is due, allowing for some much needed financial relief.
Chapter 7 bankruptcy is ideal for those looking to delay the foreclosure, though not necessarily stay in their home. This type of bankruptcy will suspend foreclosure proceedings and give homeowners a few months to remain in the house without making any payments. Our Miami foreclosure defense attorneys suggest using this time to work with legal counsel to make an arrangement with the bank or begin to save money for a future residence. With Chapter 7 bankruptcy, liability for mortgage debt can be forgiven – eliminating any responsibility for deficiency if the foreclosure goes through.
A loan modification is an agreed-upon contract between the mortgage company and the debtor that alters the original promissory note to make the borrower’s mortgage payments more affordable. Typically, the mortgage company will lower the interest rate and extend the term of the loan in order to decrease the monthly amount. Any past-due payments will be added to the unpaid principal balance.
The loan modification process takes preparation, so homeowners facing foreclosure should begin the paperwork as soon as possible. The benefit of a loan modification is that foreclosures can be immediately delayed once the application is filed. Applying for a loan modification is a complex process, however. Our foreclosure attorneys at Graham Legal P.A. feel that proper legal representation is necessary when dealing with loan modifications – as a simple mistake on the paperwork can result in the application getting denied.
Other options include Reinstatement, Short payoff and Short Sale.
If you are a homeowner in Miami-Dade County facing foreclosure, contact our expert Miami foreclosure defense attorneys at Graham Legal, P.A., to explore your case and your options. Schedule your free consultation today.