 Today’s Real Estate Market
Chapter 13 & Foreclosure
Chapter 7 & Foreclosure
It’s no secret that subprime lending has led a once vibrant housing market down a dismal and uncertain path. While many people have suddenly found themselves in trouble because of their adjustable rate mortgages, many others speculated on appreciation and simply stayed in the market too long.
This news is certainly nothing new to people from around the country, but here in Illinois, we’re actuallyseeing a different side to this housing emergency, that of the professional contractor.
In the last six months, our office has been flooded with people from the construction industry, many of whom have two or more homes under construction that they cannot sell. Many of these people took out home equity loans against one or more of their properties to help make the mortgage payments, and now the money from those loans is running out. Naturally, these people are worried about what will happen once it does.
To make matters worse, the construction industry has quite naturally followed the downturn in the real estate market. Therefore, for people that make their living in construction, the situation may be twice as bad. Not only are they sitting on homes that they cannot sell, but they don’t have other jobs that can support these investments in this real estate crunch. With so many properties on the market that aren’t selling, and lenders unwilling to refinance, many of these contractors are losing their properties to foreclosure.
In the past, people facing foreclosure had many options available to them. They could work out a compromise with their lender to modify the terms of the loan, they could refinance with another lender, they could sell their home, or they could offer to give the home back to the bank through a “deed-in-lieu of foreclosure.” Today, while it still may be possible to work out a modification with your lender, the remainder of these options no longer work as well as they once did. Finding a lender to refinance in this market is no easy task, and finding a buyer that will pay you what you owe on the property may be even harder. Furthermore, for people that have taken out home equity loans, giving the homes back through deeds-in-lieu of foreclosure is no longer an option.
For individuals in this situation, Bankruptcy may be the best alternative.
If you are currently facing foreclosure or if you have already lost your home to foreclosure, we can help.
Chapter 13 & Foreclosure
Many people are unaware that one of the main tools lawyers use to stop foreclosures is bankruptcy. In general, filing bankruptcy initiates an “automatic stay” that requires creditors to stop all collection actions, including banks that are in the process of foreclosing on your home. Even if people do not intend to keep their homes, filing bankruptcy can give them the extra time they need to find a new place and to move. This is especially true where a “Judgment of Foreclosure” has already been entered by the court and the homeowner is facing an auction sale.
For those people that want to keep their homes, Chapter 13 bankruptcy offers a great opportunity. Filing for Chapter 13 will stop the foreclosure process, and the debtor will have the chance to review his or her finances and come up with a plan to repay any amount outstanding on their home loan. Especially for people that have significant equity in their home, losing it to foreclosure is a devastating thought. Chapter 13 stops the foreclosure and gives the debtor a way to keep the home and the savings invested in it.
Chapter 7 & Foreclosure
Assuming you cannot afford to keep your home but need a little extra time to move, filing for Chapter 7 bankruptcy is an effective way to get the breathing room you need. As long as you file for Chapter 7 prior to the auction sale, the bank must stop the foreclosure proceedings. Although the “automatic stay” will eventually be lifted, you will have several weeks to find a new place to live.
In addition to buying you the time you need to move, Chapter 7 may be needed to get you out of debt with your mortgage bank. When people lose their homes to foreclosure, those homes are sold at auction, usually at prices much lower than the loan balance with the banks. This means that even after the bank takes your home in foreclosure and sells it, you will probably still owe the bank a lot of money and have nothing to show for it. If that is the case, we can help. Chapter 7 will wipe away that debt, and allow you to start fresh.
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