Facing Mortgage Foreclosure? Know Your Options

Mortgage foreclosure is something that is happening very frequently these days as homeowners struggle with worsening financial strain. Between sky high medical bills, a shaky job market, crushing debts, and a cost of living that goes up as wages stay the same, it is little wonder people are looking for ways to stop foreclosure.

A good mortgage foreclosure defense is one that works for you, and fits into the rest of your life. If you are wondering how to stop foreclosure, but do not have the financial means to pay back arrears on your own in the situation you are currently in, your best mortgage foreclosure defense might be bankruptcy.

Bankruptcy is one of the ways to stop foreclosure in its tracks, as a bankruptcy filing automatically stays all foreclosure proceedings. By specifically filing for a Chapter 13 bankruptcy you can actually save your home, as you will be able to organize your debt into a monthly payment plan. Through the plan your creditors can be repaid, including your mortgage lender, ensuring that all arrears are paid off when the payment plan is over. You will be able to hang onto your home so long as you can make those payments properly. Creditors are paid based on several factors, the most important of which are available income and the type of debt you have.  Secured creditors, such as mortgage arrears and car loans are paid first, then priority claims such as tax debt or child support are paid next, and whatever funds are left over are split between all unsecured claims.  Although in most situations there will not be enough income to pay all the unsecured debt, you will nevertheless receive a discharge at the end of your case which eliminates your personal liability.  Filing for Chapter 13 bankruptcy involves meeting a few eligibility requirements, so it is important to discuss the process with an experienced bankruptcy lawyer.

For those who do not qualify for a Chapter 13 bankruptcy filing, a Chapter 7 bankruptcy protection filing could still help. In Arizona, second mortgage lenders and in some rare instances, first mortgage lenders are able to seek out the difference between what was owed on a property and how much it sold for as part of the foreclosure process. If the lender is successful, the borrower has to pay the difference. Chapter 7 bankruptcy protection filing can prevent this issue, so discuss all options with your bankruptcy attorney.

Losing one’s home to foreclosure is very disheartening, and many people do not want to have to go through the pain of foreclosure. By working with an experienced bankruptcy lawyer, you have a chance at saving your home, or at least protecting yourself and your finances as best as possible during the foreclosure process. By working with a legal team you can get yourself on the best financial footing possible so you can move forward in the future.


This blog is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this blog. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.

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