The short answer is “YES”. If you are threatened with the risk of losing your home to foreclosure, you may be able to stop the foreclosure by filing bankruptcy. This is so because once a bankruptcy petition is filed, pursuant to Federal Law, all collection activity must stop. Foreclosure is a type of collection activity; therefore, the foreclosure activity must stop. There are a lot things that must be considered before filing bankruptcy. Bankruptcy is a serious matter that can have unforeseen consequences. Understanding bankruptcy, and how it may effect you, is necessary before filing for bankruptcy relief.
HOW LONG DOES THE FORECLOSURE PROCESS TAKE?
If everything goes smoothly for the lender, then the foreclosure process in Maryland will take approximately 90 days after the notice to foreclose has been served. The time may vary depending on the court and the mail and so forth.
In 2010 foreclosures were rampant, many people lost their homes. Many of the home losses were the result of predatory behaviors by the banks. Government stepped in and began investigating the banks. The banks were found to have sloppy foreclosure procedures and were taking advantage of the individual homeowners. Times changed, and banks are not more closely scrutinized.
Steps In The Pre-Foreclosure Process
If you are falling behind with your monthly mortgage obligation, the bank is likely to engage several steps before initiating the foreclosure process. They are likely to:
- Invite you to apply for a mortgage modification. If your bank does this, be careful. The modification offers I have reviewed seem predatory. The term of the loan is often extended, balloon payments often required, interest rates often adjust upward. The result is that you never pay the mortgage off and barely deplete the principal owed.
- You may be able to apply for loss mitigation or participate in foreclosure mediation
- You will be given the opportunity to become current on the loan and stop any foreclosure action
- You can stop the foreclosure process by filing for bankruptcy
During the Pre-foreclosure period of time the bank is likely to begin to impose various fees and penalties. A property inspection may occur, for which a fee will be imposed. This is usually merely a “drive by”. The loan may be put into default status. Another fee may be charged for this. An appraisal may be done.
STEPS IN THE FORECLOSURE PROCESS
1. Notice Of Intent to Foreclosure
The mortgage company may issue a Notice of Intent to Foreclose sometime after you have missed a mortgage payment. The number of mortgage payments missed before the notice is issued depends on the lender, and may depend on what is going on in the economy. For example, the pandemic has resulted in a federal moratorium on foreclosures for federally backed mortgages. The moratorium should soon be lifted. In usual circumstances, once the payments are due for more than 90 days, the lenders can legally move to start the foreclosure process.
If no action was taken or successful in getting the mortgage current, the lender will likely file a foreclosure action with the court after the lender issued a foreclosure notice to you. You will have the opportunity to oppose the foreclosure in the court action. If you can prove that you are current with the mortgage obligation, you will win. If you are not current, or if you do not show up, the foreclosure will proceed.
TALK TO AN EXPERIENCED BANKRUPTCY LAWYER
In many cases, filing for bankruptcy will stop the foreclosure proceedings. Every mortgage situation is different, and all the papers need to submit perfectly for getting the bankruptcy approved in the court. If you are facing foreclosure, then contact the bankruptcy attorney at Paré & Associates, LLC (formerly Law Office Of Alice Paré).
For more than 30 years, we have been helping clients in Germantown, Damascus, and throughout Montgomery County with bankruptcy cases. Contact us for a free initial consultation.