Master of Laws ~ Taxation Licensed Florida Realtor®
386.736.3660 120 E. Rich Ave., DeLand, FL 32724
If you are struggling with mortgage payments and want to prevent foreclosure this might help
Do not wait until it is too late. In Central Florida mortgage foreclosures are usually 3 1/2 to 4 months in length.
Respond to the Summons. You owe the money and you are behind. However, it is a good idea to file a response requesting that notice be sent to your home. Send the original to the Clerk of Court and a copy to the foreclosure attorney who will then have to send notice of the sale date. As a courtesy, the larger foreclosure firms often send notices, but do not count on it. Request it.
If you are considering a short sale be careful. A realtor may try to convince you to sell your home for less than you owe, and that may be possible, but you will always have to work with your mortgage lender(s) and seek their approval. Your efforts may delay or avoid a foreclosure, but in some cases you risk having to pay federal income taxes on the windfall you received on the debt the mortgage company wrote off. This problem may arise if you refinanced your home at some point and used part of the loan proceeds to pay off credit card debt or other debts not related to the property. In such a case, even if you file bankruptcy later the taxes owed for the short sale would be a nondischargable, priority debt.
Can refinancing save you? It may, but consider the following: What is the new rate and is it adjustable? Is there a balloon payment? Will there be an escrow to handle the taxes and insurance? How much will a mortgage broker cost? Will it close and fund before the sale? People can lose their home waiting for refinancing. Filing Chapter 13 bankrupcty allows you to keep your existing mortgage and terms; you get a chance to catch up.
Selling the house now may be an option but this is a very difficult market. Even if you do find a buyer in such a poor market you may be better off filing Chapter 13 bankruptcy and selling the house when things improve and without the pressure of a fast approaching foreclosure.
Quit Claiming to investors. If you do make sure you know who you are dealing with and can trust them. If the sale date is fast approaching and nothing is changeing consult with a bankruptcy attorney. Do not be taken advantage of people claiming to "resuce" you from foreclosure.
Save money. Even a couple of thousand dollars is a good start. You will need to pay the bankruptcy attorney ($1,500 - $2,000), the credit counseling provider ($25 - $40) and the bankruptcy court filing fee ($299 for Chapter 7).
Keep in contact with the bankruptcy attorney. Emergency filings typically cost extra. Complete the pre-filing credit counseling course and have your documents in order. Well in advance of the foreclosure sale date, contact your attorney and things will go a lot smoother.
Come to terms with your situation. You may need to downsize your housing cost. Chapter 13 insists you make the regular mortgage payment according the terms of the mortgage; pay the arrears and foreclosure costs. The bankruptcy attorney fees and the trustee are entitled to a significant fee on every dollar paid through the plan. The Chapter 13 payment will be higher. If you are incapable of paying your regular mortgage payment you probably won't be able to pay the additional charges associated with a Chapter 13 bankruptcy plan.
Surrendering your home in a Chapter 7 bankrupcty is an option. In this situation the automatic stay goes in to effect. The sale is stopped and cannot be rescheduled until the lender obtains relief from the automatic stay from the judge in your bankruptcy case. While that is all taking place, you'll have time to find an alternate place to live, perhaps rent an apartment and stop worrying.