Topics Covered:
What is foreclosure?
Why are foreclosures on the rise?
How can bankruptcy stop foreclosure?
Can I stop a foreclosure without filing bankruptcy?
What is foreclosure?
Dallas Foreclosure is a legal proceeding in which a creditor pursues legal action to take property that they have loaned money against that the debtor has defaulted on their obligation to make payments.
The legal process for foreclosure varies from state to state. There are two types of foreclosures, judicial and non-judicial. A judicial foreclosure involves a lawsuit to take possession of the property, which can take several months to complete. States that subscribe to a non-judicial foreclosure can complete the process after a mortgage note is defaulted and accelerated by the lender. After the lender has met the statutory requirements to file a notice of foreclosure, the foreclosure process can be completed in as little as thirty days. Texas is a non-judicial foreclosure state, which means that Texas residents can lose their homes to foreclosure much faster than residents of other states.
The sad truth is that too many people delay seeking representation until it is too late. They instead rely on the assertions from their Mortgage Company rather than independent legal counsel. Bankruptcy can be a helpful remedy to stop a foreclosure proceedings and allow the Debtor to pay back the mortgage arrears on a payment plan that is tailored for their individual budget.
Why are Dallas foreclosures on the rise?
You may recall that several years ago interest rates hit an all time record low. This reduction in interest rates spurred an increased amount of mortgage loans and creative financing. This creative financing includes what is called an adjustable rate mortgage. An adjustable rate mortgage allows a consumer to capitalize on extremely low mortgage payments for a fixed amount of time. However, when interest rates increase, so do the monthly mortgage payments. Unfortunately, many consumers are caught off guard because they were not properly informed about these types of loans. These creative mortgage loans, along with other economic factors, have contributed to an alarming increase in foreclosure.
How can bankruptcy stop foreclosure?
Bankruptcy provides for an automatic stay, which halts all collection efforts including foreclosure sales. Upon notification of a bankruptcy filing, mortgage creditors are REQUIRED to remove a scheduled foreclosure sale from the foreclosure docket and comply with the Debtor’s repayment plan under chapter 13. For example, a Debtor, who was six months delinquent on a mortgage note with payments of approximately $1000.00 per month, could file a Chapter 13 Bankruptcy and pay back the $6,000.00 delinquency over a three to five year payment plan. If the debtor meets the other requirements to make the Chapter 13 Bankruptcy plan successful, this can be the difference between a Debtor keeping or losing their property.
Can I stop a foreclosure without filing bankruptcy?
It is possible to stop a Dallas foreclosure sale without filing for bankruptcy. Mortgage companies, to meet the problems associated with the rising levels for foreclosures, have internal departments set up specifically to assist debtors struggling with mortgage deficiencies. There are some common non-bankruptcy options that include loan modifications, interest rate reduction, and forbearance agreements. Of the three options mentioned, perhaps the most widely used non-bankruptcy option is a forbearance agreement. A forbearance agreement allows the Debtor to cure the mortgage arrears by making payments in addition to the regular monthly mortgage payments over a short period of time in an effort to bring the loan current. In exchange, the mortgage company will remove the foreclosure sale from the foreclosure docket and allow the Debtor to complete the proposed payment plan. A forbearance agreement is an excellent resource to be used when the mortgage deficiency is caused by a short-term interruption in income, and the debtor is now making full wages. If the Debtor is not able to make a full mortgage payment and an additional payment, then a forbearance agreement will not be successful.
Topic: Dallas foreclosure Bankruptcy Lawyer