Very simply, there are usually three legal means to halt a foreclosure process in Massachusetts.
- Paying Off the Owed Debt – The most obvious way of stopping your foreclosure is simply to pay off the past due balance, or the owed debt on the mortgage loan. We know, however, that this is not always a financial possibility.
- Apply for a Loan Modification – A loan modification application, under new federal regulations, requires a loan servicer to stop foreclosure when your application is received for review and is therefore pending.
- Filing for Bankruptcy – If you, and your Massachusetts bankruptcy lawyer, decide that your situation warrants bankruptcy, it can be a remarkably effective way to stop the foreclosure, and give you a new financial start.
There are certain things you (as the homeowner) should always do to get ahead of the problem and give yourself the best chance for its resolution.
- Don’t ignore the problem – It is a very emotional and stressful time as you are dealing with the home of you and your family. Ignoring the issue though will only make it worse. You, or your lawyer, should contact your lender as soon as you see that you have a problem and begin a rational discussion for its resolution.
- Respond to all phone calls and mail from your lender. Again, ignoring the problem will only exacerbate it.
- Consult with a Plymouth, Hyannis, or New Bedford bankruptcy law firm so that you know all your rights in the foreclosure process and fully understand your foreclosure prevention options.
- Go over all your finances with your foreclosure bankruptcy lawyer, so that you can follow the best legal path to stopping foreclosure. Prioritize your spending and make modifications when possible.
There usually is a 90-day period during which you can reinstate (get caught up on) the loan and prevent your foreclosure. So, when you see you are in financial trouble, don’t hesitate and use this time to go over all your finances and discuss them thoroughly with your foreclosure, bankruptcy lawyer. Stay ahead of the situation if possible.
What is a Loan Modification, and Can It Help Me to Stop Foreclosure?
Most lenders, especially mortgage lenders, are very willing to talk about ways to help you through difficult financial times. The last thing a family wants to do is lose their home, and your lender is aware of that.
Your current financial situation (even if temporary) may be making it impossible for you to be able to meet the terms of your original mortgage agreement. A loan modification (of the original agreement) can allow you essentially to “make a new deal” with your mortgage company so that you can currently keep up with your payments. These modifications usually reduce the current payments you must make and move the outstanding current debt owed to the back of the original loan.
Loan modifications are certainly not uncommon, and your lender probably has programs already in place designed to help you out. Once the new terms are agreed to, your mortgage once again becomes current, and you’ll have a payment you can tolerate every month. These modifications usually go on for a specified time, and when you are able, you can revert to your original terms.
To successfully negotiate these modifications, it is often vital to work with a local Plymouth, or Braintree Massachusetts loan modification attorney. Your foreclosure, or bankruptcy lawyer is dedicated to getting your life and finances back on track. They will get you the best terms, and make sure you don’t miss any “loopholes” that you may regret later.
What Are Some Steps in the Loan Modification Process?
A negotiated loan modification will make your monthly payment affordable once again and bring your account current. Most lenders prefer helping you to get “back on your feet” rather than going through the lengthy, costly, and complex foreclosure process.
You’ll need to organize all your current financial documents for your loan modification lawyer so that they can formulate a rational and workable plan to present to the lender. They’ll want to know your financial situation as of right now, so you can prove you can afford to pay the reduced monthly amount.
You may even have to fill out a new application, but the more organized your records are, the more successful you will be at solving this serious issue. Your Massachusetts bankruptcy or loan modification lawyer will be invaluable in this step of the process. They will make sure that your plan is presented clearly, and prove it to be a doable current financial solution.
Will Filing Bankruptcy Stop My Foreclosure in Massachusetts?
Bankruptcy provides you (as the debtor) with an automatic stay and will automatically stop the process of foreclosure. Under bankruptcy law, the bank is then prohibited from foreclosure, which can provide you (as the homeowner) with some time to work out your next course of action.
Filing a Chapter 7 bankruptcy usually takes about three to four months from the date of filing to the date of discharge (or cancellation) of your debts. Unless your mortgage lender gets special permission from the bankruptcy court, no foreclosure sale can take place during that time.
This is a common way for homeowners to halt the foreclosure process, but also may have dire consequences. If you file Chapter 7 bankruptcy you still may be able to keep your home. This is especially true if you’re currently on your mortgage payments or (most importantly) you don’t have much equity in your home. However, it’s also possible that you may lose your home in a Chapter 7 bankruptcy if there’s significant equity that the trustee can use to repay your creditors.
I Know I’m in Financial Trouble, and Facing Foreclosure, What Should I Do First?
First, you now see that you have viable legal options to stop foreclosure. These options also have different degrees of financial consequences for you and your family. The Massachusetts law firm of Benner has helped a myriad of families facing foreclosure get their finances back on track. Consult with them immediately, so that you have the most professional, detailed, and personal legal guidance to save your home.