Foreclosure can be a daunting process to face. Many homeowners in Ohio wonder what can be done to stop or reverse a foreclosure once it’s initiated. In some cases, filing for bankruptcy can potentially be an effective move for a property owner facing foreclosure, due to the automatic stay involved with bankruptcies. Understanding the automatic stay and its impact on foreclosure can help you discover the right solution for your financial situation.
Are you in need of solutions for problems relating to foreclosure? If so, reach out to our skilled bankruptcy attorney at Fesenmyer Law Office by calling 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) today.
The Automatic Stay and Its Impact on Foreclosure
Bankruptcy can be a viable solution for many borrowers facing foreclosure. One of the main reasons is that you can take advantage of the automatic stay that comes with all bankruptcies.
This automatic stay puts an end, or stay, to all collection efforts against a bankruptcy petitioner. All debt-collection efforts, contact, and procedures must cease once bankruptcy paperwork has been filed; this includes foreclosure proceedings.
For bankruptcy petitioners facing foreclosure, a stay typically means they are allowed to remain in their property while foreclosure actions are on pause. As you might imagine, the relief and reduction of stress are what make many borrowers facing foreclosure file for bankruptcy. However, it is important to note that this stay is temporary in nature and lasts only as long as the bankruptcy proceedings are still underway.
Chapter 7 Bankruptcy and Foreclosure
Chapter 7 is a popular type of bankruptcy for general consumers. If a person qualifies for Chapter 7 bankruptcy, it eliminates most or all of their consumer debt and is over in about 4 months.
Perhaps what filing for Chapter 7 offers most for borrowers in foreclosure is time. However, this time is not indefinite. The automatic stay is limited in its ability to keep a delinquent borrower in their home, as bankruptcy stays typically last only during the proceedings. If a borrower is not planning on keeping their home but is looking for more time as they find somewhere else to live, Chapter 7 might be the way to go.
Chapter 13 Bankruptcy and Foreclosure
As with Chapter 7, filing for Chapter 13 bankruptcy can also lead to an automatic stay on foreclosure and other debt-collection processes. Unlike Chapter 7, though, Chapter 13 does not typically involve liquidation of assets. Instead, the creditors and the borrower work together to come up with a sustainable restructured payment plan.
One of the ultimate goals of this type of bankruptcy is to get the borrower back on track with their creditors. In a Chapter 13 the borrower’s debts are consolidated into one monthly payment plan that is paid to the court. This will allow the borrower to get back on track with their payments and keep their home.
Factors to Consider When Choosing Bankruptcy
Bankruptcy is a major legal undertaking in Ohio, so it’s crucial to consider several factors before you opt for this path.
Other Options
Bankruptcy is not the only way to stop a foreclosure, but is often the last resort when other methods have not worked. It is very important to start looking into options as soon as you get behind on your mortgage in order to give you time to get back on track. If you wait too long, there might not still be time to modify the loan or work with a debt consolidation program. Below are some alternative options:
- Debt consolidation
- Credit counseling
- Debt management guidance and planning
- Debt settlement
Borrowers with a potential foreclosure in the future may also want to consider sizing down their properties in order to have the financial breathing room they need. Sizing down a property consists of choosing a smaller, less expensive property to live in and finance.
Type of Bankruptcy
You will also want to consider the type of bankruptcy that would be the most appropriate for your situation. For example, a borrower with substantial equity who is looking to hold onto their home and make payments is usually a suitable candidate for Chapter 13 bankruptcy proceedings. Ultimately, however, speaking with an experienced attorney can provide you with the guidance you need for your specific circumstances.
Consequences
Another part of bankruptcy to weigh is the potential consequences that can come with it. For example, one of the primary results of filing bankruptcy is the short term negative hit you can take on your credit report and the years-long reporting period for bankruptcies.
Additionally, borrowers with bankruptcies may have to explain their financial issues for certain jobs dealing with finances. In other words, bankruptcy can affect your life financially for many years, even when it provides relief from current debts.
The Importance of Legal Guidance
Both bankruptcy and foreclosure are legal processes. Petitioners need a thorough understanding of the legal terms and procedures found in both in order to obtain a favorable bankruptcy ruling. Most people simply do not have the time to become bankruptcy and foreclosure experts, which is why they turn to bankruptcy and foreclosure attorneys to represent them.
With experience, training, and skill at their disposal, experienced bankruptcy and foreclosure attorneys can tailor their services to each client’s specific circumstances. Attorneys also protect their clients by ensuring that their clients remain in compliance with all laws and rules governing their current situation. For example, many timing rules and deadlines apply to bankruptcy cases. Running afoul of these can result in a worst-case scenario. With an attorney on board, however, petitioners can expect their claims to remain in compliance.
The seasoned team at Fesenmyer Law Office can find solutions for clients facing all manner of foreclosure and financial issues.
Learn More About Bankruptcy and Foreclosure in Ohio Today
Foreclosure can be a stressful time for borrowers. Fortunately, bankruptcy can and does offer relief for many dealing with foreclosure notices by allowing you to get back on track with payments and save your home. If you are dealing with a foreclosure in Ohio, consider getting guidance and counsel from a trusted bankruptcy lawyer.
You don’t have to face foreclosure alone. Turn to the premier team at Fesenmyer Law Office to find out more about your options during this difficult time. Call 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) for a consultation today.
