Our Phoenix foreclosure defense lawyers know that one of the best ways bankruptcy in Arizona can assist you with your finances is by stopping a foreclosure. But what exactly is a foreclosure, and how can bankruptcy help?
Generally speaking, the foreclosure of a house begins if a homeowner is delinquent on their mortgage payments. The lender who gave the loan then begins the process of selling the home in order to obtain payment for the debts incurred. Often, foreclosure doesn’t begin until multiple payments have been missed, and once the process has begun, foreclosure can pause while you find a way to reclaim your home. If your house is being foreclosed upon, this continuance may be the difference between retaining ownership of your home and having possession of it taken from you.
As soon as a petition for bankruptcy is filed, an automatic stay will come immediately into place that halts the foreclosure process. This does not eliminate the foreclosure, but it does pause it while you take time to assess and organize your finances, allowing you to remain in your home while you do so. The automatic stay protects you from creditor harassment or legal action against you from your creditors from the very beginning of your bankruptcy process and throughout the entire case.
How Banks Can Circumvent the Stay
There are ways, however, in which lenders can get around a stay regarding a foreclosure. If the lender is able to successfully file a motion to lift the stay, the foreclosure may proceed, though not immediately. Generally, even with a lifted stay the sale of the home will be postponed for at least two months, affording you more time to get your affairs in order.
There are also complications if the notice of foreclosure has been present for a long time. If you have received notice your home may be foreclosed upon, the stay will protect you only after the notice has expired and the pre-determined time set by the lender has elapsed. Once this has happened, the lender may file for a motion to lift the stay as before and the foreclosure sale could be scheduled. If you have additional questions regarding how banks can bypass a stay, contact a knowledgeable Phoenix foreclosure defense lawyer.
How Bankruptcy Helps
If you are highly committed to staying in your Arizona home but are delinquent on your mortgage payments, bankruptcy can be one of the most effective ways to retain your residence. When filing for bankruptcy, inform your Phoenix bankruptcy attorney of the priority level you have set for keeping your home, and he or she will be able to help you in the following ways.
Chapter 13 Arrearage
Arrearage, or overdue unpaid payments, are almost always the reason foreclosure processes are started. To help you handle these, Chapter 13 bankruptcy allows you to lump the missing payments together into one large bill and constructs a long-term payment plan. The duration of the payments is generally between three and five years, and if you have the income to meet the demands of your current mortgage, you will likely be able to avoid foreclosure entirely and retain ownership of your home.
Getting Rid of Extra Mortgages
If you have taken a second or third mortgage on your home, Chapter 13 in Arizona may help you dismiss them. While technically the mortgages would be considered secured loans, or loans backed by collateral, if the entire value of your home is less than the interest and loan fees your second and third mortgages carry, they can be re-categorized. This re-categorization takes them from secured to unsecured debts, which gives them much lower priority and the ability to be discharged entirely by the bankruptcy process.
Contact our offices at (602) GOT-DEBT to speak with experienced Phoenix foreclosure defense attorneys who can guide you through this process.