What Is Foreclosure?
Foreclosure is the legal process in which a homeowner is unable to make their mortgage payments, which permits the lender to seize the property, evict them, and sell the home.
How Do I Avoid It?
File for Bankruptcy
If the foreclosure is arranged to take place the following day or so, the most effective way to stop the sale right away is by filing for bankruptcy.
The automatic stay stops the foreclosure in its process. Once filed for bankruptcy, an “automatic stay” will be in effect. The stay works as an injunction forbidding the lender from foreclosing on your property or trying to collect its dues. Any foreclosure activity then must be stopped during this process.
The bank could potentially file a motion for relief. The bank could try to have the stay lifted by filing a motion seeking approval from the court to proceed with the foreclosure. Even if the motion is granted by the bankruptcy court, the foreclosure will be held off for a minimum of a month or two. This will give you more time to figure out foreclosure alternatives.
File a Lawsuit
You could potentially delay or stop the foreclosure by filing a lawsuit against your bank if they’re using a nonjudicial process for the foreclosure. A nonjudicial process just means that the foreclosure is not being completed within the court system. This strategy typically will not work if the foreclosure is in fact judicial. This is because, by the time of a foreclosure sale, you’ve already had the chance to be heard in court.
In order to prevail, you must prove to the court that foreclosure should not proceed because, for example, the bank:
- can’t provide the ownership of the promissory note
- violated a state law
- failed to follow the required steps in the process of the foreclosure
- did not comply with the state mediation requirements
- made other serious errors.
However, there is a downside to filing a lawsuit against your bank. If you do not succeed in proving your case you’ll only hold off the foreclosure process briefly. Lawsuits have the potential of being expensive, and without a reasonable basis in regards to your claims, you could be burdened with paying the bank’s court costs and other fees.
With this option, you won’t be able to hold off until the last minute, but you could delay a foreclosure by applying for a loan modification, or any other foreclosure avoidance options. This is because your bank has restrictions from dual tracking. Dual tracking takes place when the bank proceeds with its foreclosure against the homeowner while a loss mitigation application is pending.
In the end, if the modification application is approved, the foreclosure will permanently stop so long as you continue to pay your modified payments.
Speak To An Attorney
If you’re taking on an imminent foreclosure sale and are considering any of the options found above, we strongly recommend that you consult with a local foreclosure attorney or bankruptcy attorney as soon as possible.
Give us a call anytime at (315) 558-8332