Many people facing foreclosure have incorrect information as to what they can, and cannot do to Stop Foreclosure. There are many myths about Foreclosure & Bankruptcy out there, so if you are facing foreclosure, you need to know your legal options once the foreclosure process has started. Don’t wait until the last minute to seek legal advice on how to stop foreclosure. Contact Texas Bankruptcy Attorney R.J.Atkinson for a free bankruptcy evaluation and a free bankruptcy means test to assess you legal options to stop foreclosure and keep your home.
The foreclosure sale date is the same everywhere in the State of Texas, so whether you live in Austin, Dallas, San Antonio, Houston, Plano, Waco, San Marcos, New Braunfels, or anywhere else in Texas, the foreclosure sale is the first Tuesday of the month. Every month, there are thousands of people in Texas whose homes are posted for foreclosure. If you are behind on mortgage payments, property taxes, or homeowner’s association dues, and are facing foreclosure of your Texas home or property, our Bankruptcy Attorneys can answer your questions. More than likely you have questions about how to stop the foreclosure and save your home. Don’t rely on what you think you know because it may be a myth or just plain wrong.
The following are some of the common Myths about Foreclosure & Bankruptcy:
- 1. Once the foreclosure process has started there isn’t anything that can be done to stop it?
There are many options to stop foreclosure available, depending on the facts of your particular situation. The sooner you seek professional advice to determine your legal options, the more options you will have available. It’s usually not a good idea to wait until the day before the foreclosure sale to address a foreclosure, but you do have options. It is extremely important to explore your options and exercise your rights prior to the foreclosure sale.
- 2. The Bank Wants Your House.
Believe it or not the bank doesn’t want your house. The reason they are foreclosing is because they simply want the money they lent you paid back with interest. Even though it may seem like the bank wants your home because they may have initiated foreclosure proceedings against you, the bank really only wants their money. Although it might seem strange or contradictory, even if they are foreclosing, they don’t usually want to take your home. They just want their money quickly, and they want it with the least amount of expense to get it. If your home goes up for auction at the foreclosure sale it might not sell. In fact the property might not sell for months, which in turn costs the bank or mortgage company even more money. Banks have policies and procedures, and they have a responsibility to their shareholders to take positions to collect monies past due. Foreclosure is one of those methods.
In a vast majority of cases, the bank would rather work with a homeowner in avoiding a foreclosure as opposed to taking the house bank. If you ignore the bank or don’t try to deal with them because you believe they want your home, think again.
- 3. I Just Received a Foreclosure Notice so I Have to Move Out Immediately.
Not true. From the time you miss your first payment to the actual foreclosure sale it’s not uncommon for three to six months or more to go by. However, once you have received notice of the foreclosure sale date, it is a count down to that date so it is important to explore your legal options as soon as possible. In Texas, your home can be sold at foreclosure in as little as 45-60 days in a default or no response situation. That is if you don’t respond to the notices as per the procedure outlined under the Texas Property Code. Following the foreclosure you’ll likely have to go through an eviction hearing. At some point, if you don’t vacate the premises, you will be physically removed. Time can be on your side if you take action early and don't waste your options for stopping the foreclosure. Only an order of the court can compel you to leave your home. Just because you owe money and may be behind on your house payments, the mortgage company, taxing authority, the bank, your homeowner’s association, nor any other party cannot just go to you house, throw you out, and change the locks. There is a legal process that must be adhered to. All creditors must follow the rules within their legal rights to do so. Remember that you have legal rights to stop a foreclosure on your property. You may be eligible to exercise those rights under the Bankruptcy Code to stop the foreclosure and save your Texas home. No bank or lender can just kick you out without adhering to the legal process.
- 4. I'm Posted for Foreclosure, Nobody will Refinance Me Out of Foreclosure.
Probably not true. There’s usually somebody if the price is right and the circumstances are there. If you are facing foreclosure, your credit situation probably isn’t going to be that good, so you will probably pay much more than traditional mortgage lenders if you can get refinanced. There are specialty hard money lenders that will refinance houses in certain situations to pay off the old lender and stop the foreclosure. Those specialty lenders usually require 50% to 75% equity, and charge much higher interest rates than you may be accustomed to. Consider that if your home is in foreclosure now for whatever reason, why would a bank finance you since you were unable to pay the existing mortgage lender. It is not easy to refinance once you’re in foreclosure, but it can be done. Be on the lookout for brokers that may try to charge more points or higher interest then another just to gouge you for more fees because they know your situation. Also consider timing. It may be highly unlikely to refinance in such a short period of time. When you originally obtained the mortgage on your property, how long did it take? Did it take 5 or 10 days? Many mortgage brokers will lead you on until the last day before the foreclosure sale and advise you that they are unable to help. Don’t let that happen to you. Make certain you explore all of your options with an experienced Texas Bankruptcy Lawyer while the mortgage broker is trying to refinance so you don’t put all of your eggs in one basket.
- 5. If I Go Through a Foreclosure or a Bankruptcy, I’ll Never be able to buy a House Again.
Definitely not true. Think of yourself as a decision maker at a bank and someone comes in looking for a mortgage loan but they got foreclosed on 2 years ago and let the home go. As a banker, you know that letting it go back probably cost the bank money. Are you going to lend them money? From a banker’s perspective a foreclosure can be viewed as one of the worst things ever on a credit report. That being the case, there are some banks and private mortgage lenders that will make you a loan even after a foreclosure. You listen to the radio, see the TV ads, and read on the internet, Bankruptcy OK! The ads are everywhere. That’s because where there is opportunity, someone will lend money. You should expect put down a significant down payment and pay a very high interest rate, but you can get financed.
Filing for Bankruptcy to repay whatever you are behind over a period of 3 to 5 years may fare better than simply letting the house go. Put yourself in the spot of the banker again. Someone comes in looking for a mortgage loan but they have a foreclosure on their credit report. They filed Chapter 13 bankruptcy to repay what they were behind instead of letting it go back to the bank. Would you rather lend money to the person who let their house go back or the person who repaid their debt and kept their home? The real point here is that you can get financed even with a foreclosure on your credit, but depending on how you deal with the foreclosure will probably have an impact on who will give you a mortgage in the future and at what cost.
- 6. Filing for Chapter 7 Bankruptcy will Stop the Foreclosure and Save My Home.
Not Necessarily. Although filing for Chapter 7 Bankruptcy will stop a foreclosure, it will do so only on a temporary basis. The filing of a Chapter 7 Bankruptcy will only temporarily stop a foreclosure until the lender can file a motion to lift the stay and foreclose with the Bankruptcy Court’s permission. Just like Chapter 13 Bankruptcy or any other chapter of Bankruptcy, the automatic stay of bankruptcy, stops most all collection actions which goes to include foreclosure. Eventually you’ll need to do something else in order to keep the house in the long run if you are facing foreclosure. Filing Chapter 7 Bankruptcy will not allow you to keep your home long term if you are behind on the payments.
- 7. My mortgage Hasn’t Been Paid for Sometime now, and No One Has Contacted Me. Obviously I Can Stay Here and Not Pay Anything Again.
Extremely Unlikely. Big companies such as banks and mortgage lenders do make mistakes from time to time. When a mortgage gets sold or when a bank changes hands, there can be a lag time to catch up with the accounts. Files can get misplaced, lost, or there may be a transition period where nothing happens. Don’t think a bank or mortgage lender will just let a significant amount of money disappear or be forgotten. At some point you will definitely hear from the bank.
- 8. I May be Behind But I Only Have to Pay What I’m Behind on and NOT their Legal Fees.
Unfortunately you will have to pay, that is if you want to keep the house. You should review your mortgage documents and the homeowner’s association agreement. It’s likely very clear that you will be responsible for attorney’s fees should any be necessary to collect association dues or initiate a foreclosure against you. This is also true for mortgage companies, taxing authorities, and others who have a secured interest in your property. Sometimes their attorney’s fees may far exceed what you expected, and in certain cases, may be considered excessive. The Bankruptcy Court can be a great forum to determine whether or not attorney fees are excessive or not, but whatever they may be whether decided by the court or not legal fees must be paid.
- 9. After the Judge Hears My Circumstances They Won’t be Able to Kick Me Out.
It’s possible to buy a bit more time if a judge decides to be sympathetic in your particular case, but don’t count on it. The courts are filled with hard luck stories and most judges have usually heard them all. Keep in mind that unless there is a wrongful foreclosure, a procedural error, or any other valid reason why you haven’t paid your mortgage, a judge isn’t likely to show much sympathy. Even if you get another 10, 20, or 30 days, you are only delaying the foreclosure which if you don’t address it, you will inevitably end up out on the street.
- 10. Only Deadbeats File for Bankruptcy.
Absolutely not true. In fact, most Chapter 13 Bankruptcies are filed to stop foreclosures. The vast majority of the people who end up facing foreclosure and subsequently file for Chapter 13 Bankruptcy to keep their homes are good, honest, hard-working people. They may have lost their job, encountered a temporary illness, a divorce, failed in business, or maybe an increase in property taxes puts them over the edge. Whatever the reason, people file bankruptcy as a last resort. That’s why the bankruptcy laws exist, to give honest debtors protection of their property and a fresh financial start. Consider it like a safety net, if you need it, its there. If you are struggling with debt and have been struggling for some time and are thinking considering bankruptcy, consider all the famous individuals that have filed bankruptcy to deal with their debt. Abraham Lincoln, Ulysses Grant, Henry Ford, and Walt Disney weren’t deadbeats. You don’t have to be famous to get a fresh financial start; you just need to know the facts about bankruptcy and know when to consult a bankruptcy lawyer.
- 11. My Mortgage Company Made a Mistake on a Payment and I’ve got the proof. They Won’t be able to Foreclose on Me, I’ll sue them and Get a Big Settlement.
Maybe the mortgage company is a little wrong. Maybe the mortgage company is even 50% wrong. But if you are behind 10 mortgage payments but over paid on one, or you didn’t make 5 payments because there was a discrepancy on one, you need to concentrate on the right issue. If you are behind on payments, then you are behind on payments. Wasting time or getting caught up in the minor details of a mistake made by the lender usually won’t make a judge stop a foreclosure proceeding. In the end, it will be an offset. They’ll credit your $50.00, $350.00, or $1,500.00 and foreclose for the $5,000.00, $10,000.00, or $15,000.00 you’re behind. If you are facing foreclosure you need to focus on stopping the foreclosure and deal with the payments you know you are behind on. A Bankruptcy Court is an excellent forum to challenge mistakes but failing to make ongoing payments because of a nominal mistake by the lender could cost you your home.
- 12. There’s not enough time to file for Chapter 13 Bankruptcy before the foreclosure sale.
That depends on your circumstances. If you wait until the very day of the foreclosure sale or the hours before the sale then you might be too late. If you need to file for Chapter 13 Bankruptcy to stop the foreclosure sale, the sooner you begin the better. If you’re days away from the foreclosure sale, then you must take action now. You must of course be eligible to file for Chapter 13 Bankruptcy and comply with the Chapter 13 pre-filing requirements. The longer you wait, the greater the risk you have to run out of time. When your home is up for foreclosure, you need to be proactive if you want to stop the foreclosure by filing Chapter 13 Bankruptcy to save your home. Contact Texas Bankruptcy Lawyer R.J.Atkinson for a free bankruptcy evaluation the moment you receive a notice of foreclosure. So even if you have waited until 5 days before the foreclosure sale, by contacting us immediately instead of waiting until the last minute, you will have time to prepare your bankruptcy case.
- 13. If I Let My House Sell at the Foreclosure Sale it Will Sell for Much More than I Owe, and They’ll Owe Me Money?
Good luck. Typically, the sale brings in less than the debt which, in most cases, you will technically owe. Don’t count on your home selling for more than what is owed even if you have significant equity. But, if you are one of the few whose home sells for more money than is owed, then that money will be yours after legal fees, and other expenses arising out of the foreclosure.
- 14. The Loan is a Secured by the House. I’ll Just Give the House Back and If the House Sells for Less Than What I Owe at the Foreclosure Sale Nothing Will Happen.
To the contrary, if you let your property go back and it sells for less, you will still owe whatever part of your debt is not paid by the sale of the property. This remaining debt is called a "mortgage deficiency". The lender will most likely try to collect the deficiency by suing you personally. Even though every foreclosure sale is different, most houses sold at the foreclosure sale almost always never bring as much money as they would if the property was sold through a licensed real estate broker. The amount of the deficiency will depend on what your real property was worth and how much money there was in the property over above what was owed on your mortgage or mortgages.
Also, there may be a potential tax consequence of a foreclosure sale deficit as the Internal Revenue Service requires all mortgage lenders to report foreclosures on form 1099 which is a miscellaneous income report. Depending on the amount of the sale you may be required to report the income from the forgiveness of debt.
- 15. If I do file for Chapter 13 Bankruptcy There’s No Guarantee That It Will Stop The Foreclosure?
A section of the United States Bankruptcy Code 11 U.S.C. § 362 referred to as the "automatic stay" will stop a foreclosure immediately upon the filing of a bankruptcy. The "automatic stay" applies in Chapter 13 cases as well as any other chapter under the Bankruptcy Code. There is an exception; in that if you have previously filed for bankruptcy you may have some problems. If you are considering Chapter 13 and have had prior bankruptcies, you need to consult with an attorney as soon as possible in order to determine if the automatic stay will take effect in your case or not. The bottom line is that if you are eligible to file a Chapter 13 Bankruptcy and haven’t previously filed, then filing for Bankruptcy, even at the last minute can stop the foreclosure.
- 16. It’s to Expensive to File for Chapter 13 Bankruptcy?
That depends on what you consider to be expensive and what you have at stake. The cost of Chapter 13 depends on the complexity of your case. In most cases, not all, we can file your Chapter 13 Bankruptcy for the $274.00 filing fee and with no money down on attorneys fees with the balance paid through the Chapter 13 plan. Your monthly plan payment and your attorney fees will be higher if you wait until the last minute to file Chapter 13. So if you are facing foreclosure, you should contact our office immediately for more information, and to find out if you qualify for Chapter 13, at a free initial consultation.
Stop Foreclosure on Your Home. Don’t Let Your Home Be Sold…
If you are facing foreclosure, don’t just sit back and ignore it or you may end up loosing your home. If you live in Austin, Houston, San Antonio, Dallas, Waco, San Marcos, Plano, or most anywhere throughout the State of Texas, contact the Texas Bankruptcy Lawyers at The Law Offices Of R.J.Atkinson for a free bankruptcy evaluation and a free bankruptcy means test to see how we can help you with the foreclosure. We may be able to help you file for bankruptcy to stop the foreclosure and save your home.
Contact Texas Bankruptcy Attorney R.J.Atkinson at: 800-436-9056