1. Reinstatement. Mortgage reinstatement is your first and best option when facing foreclosure. When you reinstate your mortgage, you pay a lump sum to catch up your missed mortgage payments, late fees and charges.
2. Payoff. Payoff is similar to reinstatement, except instead of catching up on missed payments, you pay off the entire balance of the mortgage.
3. Modification. If reinstatement or payoff are not options for you, modification may be a good option. But it takes time, and modifications are frequently denied. Modification will stop a foreclosure fast only if you are well along in the process.
4. Refinance. If you are able to refinance your mortgage, you may be able to wrap missed payments into the new loan and even obtain a lower monthly payment.
5. Postponement. If you are very close to obtaining the funds necessary to reinstate your mortgage (and you can prove it to your lender via documentation), then you may be able to convince them to postpone the auction.
6. Injunction. In cases where your mortgage lender has committed serious errors in foreclosing on your home, you can sue the company and request an emergency injunction to stop the auction. These cases are extremely rare.
7. Bankruptcy. Chapter 13 bankruptcy stops foreclosure immediately and gives you the breathing room you need to reassess your options. Filing bankruptcy allows you to consider modification, reinstatement, and refinancing, as well as repayment over an extended period.

Call us to stop a foreclosure sale

We are thoroughly familiar with all of the options available to homeowners facing foreclosure. We can help you think through solutions and work out a plan suitable to your situation. Call Lee Legal at (202) 448-5136.

Believing that once the foreclosure process starts, you will lose the property.

Not so fast. Your lender must comply with state foreclosure procedures to complete the foreclosure. You may have affirmative defenses. Or you may have other options to fight the foreclosure. Sometimes, selling or surrendering the property is the best option for you. But you must take an active role in the foreclosure process if you want to achieve an optimal outcome. Your lender is concerned with its investment, not yours.

Not exploring selling the property.

If you have equity in the property, then you also have the option of selling the property. But if you wait too long, you will not have time to exercise this option. You must sell the property before a foreclosure auction is held. Selling real property takes time. You must hire a realtor and market the property. You must go to closing and find a new place to live. This process takes time. If you run out of time and still want to sell the property, consider bankruptcy to delay the foreclosure and gain some time to sell.

Not attempting loan modification.

Usually, the best way to avoid foreclosure and retain the property is to obtain a mortgage modification. You will need to submit to your lender a loss mitigation package. Sometimes attempting loan modification can seem futile, especially if you have been denied modification in the past. But once foreclosure proceedings are initiated, the lender’s modification calculations change. Foreclosure is expensive to lenders. If your circumstances have changed and you can afford your mortgage going forward, your mortgage company may now be more willing to extend favorable modification terms. It may seem counterintuitive, but filing for Chapter 13 bankruptcy could also help you obtain a mortgage modification.

Thinking you can get the property back after the auction.

In some states, there is a time period after a foreclosure takes place during which you can pay the full price of the auction bid plus costs. This is called the right of redemption. Unfortunately, there is no right of redemption in Virginia, Maryland, or the District of Columbia. You cannot get your home back after foreclosure in the D.C. area. Once the property sells at foreclosure auction, you no longer own the property and many of your rights are extinguished.

Dealing with the lender instead of their attorneys.

Once your lender has hired counsel, you must deal with the attorneys, not the lender. Certain processes must still go through the lender or their underwriters. But for the most part, you must attempt to negotiate any workout through the lawyers.

Avoiding bankruptcy at all costs.

A Chapter 7 bankruptcy may only temporarily stop a foreclosure. But a Chapter 7 will allow you to orderly vacate the property and to discharge the mortgage debt. In most cases, Chapter 7 is a temporary solution to foreclosure. On the other hand, a Chapter 13 bankruptcy will give you up to five years (60 months) to repay your mortgage arrearage. Chapter 13 reorganization allows you to resume payments and get your mortgage back on track.

Talk to a foreclosure defense lawyer to avoid common foreclosure mistakes.

In most cases, the foreclosure process is fairly straightforward. But your response to foreclosure is critical to achieving your goals toward the property. To avoid the most common foreclosure mistakes, talk to a foreclosure defense attorney once you receive a notice of foreclosure.

Stop the foreclosure process

In some cases, it makes sense to allow a foreclosure auction to take place. If you no longer want to keep the property and intend to file bankruptcy to discharge the mortgage, then allowing the property to go to foreclosure auction can make sense.

In most cases, however, you will want to stop the foreclosure process. We strongly recommended that you seek foreclosure assistance once your mortgage company informs you of their intent to accelerate your loan.

Your options to stop foreclosure

The earlier you act, the more options you have. In most cases, homeowners have four basic options: reinstatement, workout, modification, and bankruptcy.

Reinstatement involves getting current on your mortgage, or paying the entire past-due amount plus costs and fees. Workout broadly refers to the process of obtaining a short-term arrearage repayment agreement with your lender. Modification can take up to a year to complete and therefore requires early and aggressive attempts to modify post-default.

Once a foreclosure auction has been scheduled, generally speaking your only option to stop the process is to file bankruptcy. If you intend to surrender the property, Chapter 7 bankruptcy will stop the foreclosure. Chapter 7 also buys you some “breathing room” to find another place to live. And Chapter 7 allows you to completely eliminate your liability on the mortgage debt.

Chapter 13 bankruptcy, on the other hand, allows you to repay your missed mortgage payments over an extended period. If you want to keep your home but can’t afford to reinstate your loan, Chapter 13 is usually the way to go. Filing bankruptcy immediately stops a scheduled foreclosure auction. We will then propose a Chapter 13 Plan that addresses all of your debts, not just your mortgage.

Lee Legal provides foreclosure assistance

If you are facing foreclosure in Washington DC, Maryland or Virginia, call Lee Legal at (202) 448-5136 to discuss your options. Providing foreclosure assistance to the DC area since 2008, Lee Legal offers top-notch legal services at very reasonable rates.

Calculation errors

If your lender fails to credit payments that you have made then perhaps you should not be in foreclosure at all. A lender’s miscalculation of amounts owed can give rise to a foreclosure defense. This applies to both principal balance, escrow balance, payoff and reinstatement figures. Unfortunately, this happens more often than one would expect, and this is the most common foreclosure defense.

Notice requirements

Maryland, Virginia, and Washington, DC have different requirements for notice to borrowers prior to foreclosure. If your lender attempts to foreclose against your primary residence and you do not receive notice, that can give rise to a foreclosure defense. Lenders per jurisdiction must provide differing degrees of notice of foreclosure, but all must provide a notice of intent to accelerate. After all, it should not come as a surprise to you that your home has been scheduled for a foreclosure auction.

Truth in Lending violations

TILA, or the Truth in Lending Act, requires accurate and fair loan origination and billing practices. Today, all large institutional lenders comply with TILA. Local mortgage lenders, however, may fail to meet TILA standards for loan origination disclosures. In those cases, the homeowner may be able to rescind the loan.

Show the note

This defense challenges the lender’s ownership of the mortgage loan. Lenders often transfer (or “assign”) loans to different lenders. While common during the 2008 mortgage meltdown, the so-called “show the note” defense carries less weight these days. That’s because lenders have cleaned up their documentation, which had gotten sloppy during the days leading up to the financial crisis. In most cases, lenders today can prove ownership.

Predatory lending

Like the “show the note” defense, predatory lending is less common lately. Most of the predatory loans that originated during the mortgage bubble have either already foreclosed or are too old to be considered predatory at this point. Still, in some cases, a defense of predatory lending can be raised. This is especially true in cases where the borrower belongs to a protected class.

Sort through your foreclosure defenses

If you are facing foreclosure, the experienced foreclosure defense team at Lee Legal can help you determine your best options. Call us to schedule a free consultation.

Find a new job, fast

You will not be able to hold off foreclosure if you remain unemployed for an extended period of time. You will need income to make your monthly mortgage payment. Income is what qualifies buyers for home loans. Income sustains the lender-borrower relationship.

Home price appreciation
has significantly outpaced wage growth
throughout the recovery from the Great Recession . . .

Foreclosure Trends on the Horizon,
DSNews

If you have a temporary loss of income, your lender will probably work with you. Whether you qualify for forbearance or other types of relief largely depends upon your loan type and payment history. But your income is also very important. Mortgage companies look much more favorably on temporary losses of income than they do extended periods of unemployment. To keep your workout options alive with your mortgage servicer, find a new job. And fast.

Make the mortgage payment, if you can

If you have savings, tap it. If you exhaust your cash, consider taking out a loan against your retirement, if that option is available. If you have to choose between making a credit card payment or making your mortgage, choose your mortgage.

If you are able to make your mortgage payment for the entire time that you are unemployed, that’s 99 problems minus one. Keeping your loan in good standing for as long as you can also allows you to focus on your search for new employment.

Charm your lender

Falling out of touch with your mortgage company will land you in foreclosure much more quickly than if you call them on a weekly basis. You may feel a bit silly calling them to report that you’re still looking for work. Do it anyway because it matters. Try to charm your lender. Tell them how you intend to prevent foreclosure if you lose your job.

When you call your mortgage company, they annotate your account. You don’t have to give them a long story every time you call. Just provide them with a quick update on your efforts to obtain gainful employment. Tell them that you’re excited to start working again. Find out if there’s anything that you can provide to them to prevent foreclosure before they start the process. Try to determine their timeline on your account, if you can. Charm them.

Only by contacting your lender will you be able to learn whether you have options available to you, such as forbearance or modification. But those options are strictly voluntary on the part of the lender. If you want to be considered, you will have to be a model borrower. Charm them.

File bankruptcy

Once all other options are exhausted, the only legal means of preventing foreclosure is bankruptcy. If your job loss was temporary and you now have regular income, a Chapter 13 bankruptcy will allow you to make up any missed mortgage payments while cleaning up any other debts you might have. Alternatively, a Chapter 7 bankruptcy will also stop foreclosure proceedings and at least buy some time to deal with your lender while you explore alternative housing options.

How to prevent foreclosure if you lose your job

Find a new job. Tap savings to make the mortgage payment. Charm your lender. And finally, if you must, file bankruptcy. You can prevent foreclosure if you lose your job, but your options become more and more limited over time.

Trying to hold onto your home when you’re unemployed can be nerve-wracking. The truth is that no matter how well the economy is doing, all that matters to you personally is whether you will be able to keep your home.

Before an auction is scheduled, you have lots of foreclosure prevention options. But the only sure-fire way to stop foreclosure immediately is to file bankruptcy.

Chapter 13 bankruptcy stops foreclosure immediately

Bankruptcy is a powerful legal mechanism that enjoins all creditor actions, including a scheduled foreclosure auction. You may want to keep the property. Chapter 13 reorganization allows you to make up any missed mortgage payments over a three to five year period. If you can afford your mortgage, plus enough to repay the arrearage, then you will be able to keep the property. Many clients find their lenders more open to a mortgage modification once they file for bankruptcy protection.

Perhaps, however, you can no longer afford the property. If your property has equity, Chapter 13 allows you the time you need to list, market, and sell the property.

Or maybe you’re not yet sure what to do with the property. In most cases, it is not advisable to simply allow the property to sell at foreclosure auction. Keep your options open until you decide on the course of action best suited to your circumstances.

Stop foreclosure immediately — don’t wait until it’s too late

Once your lender schedules a foreclosure auction, it may be too late even to reinstate your loan. Consider filing bankruptcy prior to the scheduling of a sale to save on attorneys fees and costs. But you must absolutely file bankruptcy before the foreclosure auction actually takes place. If you file a minute too late, the property is lost forever.

Lee Legal routinely files emergency bankruptcy to stop foreclosure. Call us at (202) 448-5136 to stop foreclosure in Virginia, Maryland, or Washington, D.C.

If no foreclosure auction has been scheduled

If you are in default but less than three months behind, reach out to your lender and attempt a repayment plan. Your mortgage company may allow you to make up missed payments over several months.

If you are unable to reinstate, request modification options from your lender. Work with your mortgage company or servicer and attempt to get back in good standing.

You must communicate with and respond to your lender quickly. Otherwise, your lender will schedule an auction and modification will no longer be an option.

Once a foreclosure auction has been scheduled

Mortgage companies incur most of the costs for the foreclosure up-front. These costs include attorneys fees, court costs, and publication expenses. Foreclosure is an expensive default recovery mechanism. Once a foreclosure auction date and time and place have been set, your only option to stop it is bankruptcy.

Mortgage companies and substitute trustees will not stop the foreclosure auction unless legally required to do so.

Bankruptcy stops foreclosure without fail

If you want to keep your property, you cannot allow the auction to happen. If a foreclosure auction has been scheduled, you must file for bankruptcy prior to the auction to stop the foreclosure.

Filing Chapter 13 bankruptcy allows you to stretch out your missed mortgage payments over a period as long as 60 months. Maybe you just want some time sell the property. The bankruptcy automatic stay immediately stops foreclosure and gives you time to market the property.

If you want to stop foreclosure without filing bankruptcy, you must act very soon after your initial default. Otherwise, your mortgage company will schedule an auction and your only option will be bankruptcy.

If you are in foreclosure, contact an experienced foreclosure defense attorney to discuss your options.

If you are facing foreclosure, you have options, but you must act quickly. Simply allowing a foreclosure to happen is usually not the best course to take.

Fight Your Foreclosure in Washington, D.C.

When a lender commences foreclosure against a homeowner in D.C., the homeowner can request loss mitigation. The Superior Court for the District of Columbia has developed guidelines for residential foreclosures that provide for certain basic homeowner protections. You must avail yourself of these protections, however, or they will be considered waived. In some cases, it makes sense simply to delay a foreclosure auction. But most homeowners want to keep their property and get back on track with their regular monthly payments. Delaying foreclosure in those cases will not suffice. You must proactively fight the foreclosure in court.

The rules of civil procedure for the District of Columbia define the contours of foreclosure litigation in DC. Missing a deadline or insufficiently pleading your case may result in judgment for the mortgage lender. It is strongly recommended that you retain an experienced foreclosure defense attorney once you receive notice of the complaint for judicial foreclosure.

Fight Your Foreclosure in Virginia and Maryland

Unlike in the District, foreclosure in Virginia and Maryland commences very quickly. In fact, a foreclosure auction can take place as soon as 90 days after defaulting on your mortgage. You may have specific, particularized complaints against your mortgage lender. You may even dispute that the foreclosing party owns the debt. But courts in Maryland and Virginia no longer entertain (once novel but now considered frivolous) “show the note” defenses. Delaying a foreclosure auction in VA and MD by means other than bankruptcy is next to impossible.

Chapter 13 bankruptcy will not only stop foreclosure. It also forces your mortgage company to accept the repayment terms that you propose. Most mortgage companies do not like this. It’s amazing how often homeowners are approved for a mortgage foreclosure shortly after successfully confirming a Chapter 13 Plan. You may be able to exit bankruptcy after just a few months in bankruptcy if you obtain a mortgage modification as a result.

Lee Legal Will Fight for You

No lawyer will suggest that you represent yourself in foreclosure litigation. While some percentage of pro se cases may resolve favorably to homeowners, litigating a foreclosure on your own puts you at a distinct disadvantage. Fight your foreclosure the right way: retain Lee Legal to fight your foreclosure for you.

If your mortgage company actually accepts your payment, they will not apply it to your most recent bill.  To stop or delay a foreclosure, you must get the bank to agree (in writing) to forbearance. This is not easy.

The fewer missed payments you have, the more options will be available to you. The larger the amount that you owe, the less the mortgage company will be willing to work with you.

If the Bank Accepts Your Partial Payment

Late payments not only lead to foreclosure. They also come with heavy fees and penalties. On some loans, mortgage banks make more money on fees and penalties than on actual mortgage payments. On other loans, the bank makes more by foreclosing than from contractually-due payment.

If your mortgage lender accepts a partial payment for you, the partial payment will not delay foreclosure. Instead, your lender will apply any payment you make to the oldest outstanding payment due, including fees. In the meantime, continuing monthly payments due continue to accrue.

If you are seeking to stop or delay foreclosure, partial payments will only work if you have a forbearance agreement with your lender. And mortgage lenders only very rarely grant forbearance agreements in exchange for partial payments.

If the Bank Rejects Your Partial Payment

After three missed mortgage payments, most banks reject partial payments. Instead, your bank will insist upon payment in full of the entire amount due, plus penalties, fees and interest. If you cannot make this payment amount, then the mortgage company moves your account to the foreclosure department.

Once you are in pre-foreclosure, you must make tough decisions in a short period of time. You should contact a local foreclosure defense attorney immediately to assess your options.

Will Partial Payments Delay Foreclosure?

Most mortgage loans allow lenders to decline partial payments from delinquent borrowers. Your lender will send you a letter explaining why your payment was declined. You should contact an attorney to review this letter and to help you assess your options. Unless you have a forbearance agreement from your lender, partial payments will not delay foreclosure.

If you receive a Complaint for Judicial Foreclosure, there are deadlines to file papers with the court. Once you are served, you have only 20 days to file and serve an Answer to the Complaint. As soon as you receive notice of the foreclosure, you should contact a foreclosure defense attorney immediately.

Foreclosure Prevention in Washington, D.C.

In the District of Columbia, your mortgage company must sue you if they want to foreclose on your property. Facing foreclosure can be overwhelming, but hiring an attorney who can assist you in navigating the foreclosure defense process will put your mind at ease. Lee Legal has helped hundreds of homeowners in Maryland, Washington D.C. and Virginia prevent foreclosure on their properties. We can help you, too.

Foreclosure Defense Options

Once we know a little more about your case, we will explore with you all of your foreclosure defense options, including:

• Mortgage modification or refinance
• Sale of the property or deed-in-lieu of foreclosure
• Filing Chapter 13 bankruptcy to stop the foreclosure
• Surrender to the bank, especially for an under-water or upside-down home

Each of these foreclosure prevention options starts with your Answer to the Complaint. Your specific foreclosure defense will shape the course of the litigation and impact the success of your case.

Mortgage companies doing business in Washington, D.C. are required to submit to mediation with homeowners seeking to prevent foreclosure. Once all voluntary workout options are exhausted, we will mediate, which gives us an additional 90 days to hammer out a deal with your lender.

Don’t Put It Off!

Many states have a right of redemption, which allows a homeowner to cure the mortgage default after foreclosure. Washington, D.C. does not have this right of redemption. Once the home is sold at foreclosure auction, you cannot get it back. You could also get stuck with a huge deficiency judgment after the foreclosure. As soon as you receive notice that you are in foreclosure, contact a foreclosure defense attorney immediately.

You may have fallen behind on your mortgage, but you still have foreclosure defense options. Call foreclosure defense attorney Brian Lee for a free consultation. Do not wait until the last minute. Give yourself the time to consider each of your potential foreclosure defenses.

File Chapter 7 to Stop Foreclosure

If you want to stop foreclosure, but you do not want to keep your home, file a Chapter 7 bankruptcy. Stopping a foreclosure with Chapter 7 gains you some breathing room and allows you the time to move to another place. In these cases, you are not “stopping” the foreclosure, but simply delaying it.

Chapter 7 can temporarily stop foreclosure, but you must get current on your mortgage if you want to keep the property. Otherwise, the foreclosure will eventually continue. After falling behind on your mortgage, a Chapter 7 bankruptcy filing will signal to the lender that you are accepting the foreclosure but may need time to move. If you cannot afford the monthly mortgage payments, even with a modification, then Chapter 7 is a good choice for you.

File Chapter 13 to Stop Foreclosure

Chapter 13 bankruptcy takes 3-5 years to complete, so it much more complicated than a Chapter 7. However Chapter 13 allows you to pay missed mortgage payments, late fees, and escrow advances over an extended repayment plan. To complete a Chapter 13 Plan, you will need at least enough income to meet both the monthly mortgage payments (and condo or homeowner association payments) plus some money each month toward the missed payments.

In other words, Chapter 13 bankruptcy allows you to reorganize your mortgage debt and repay missed payments over a period as long as 60 months. Chapter 13 can also, on the other hand, simply buy you some time to figure out what you want to do with the property. You may be able either to find a buyer and sell the property or obtain a mortgage modification.

Chapter 13 may also help you eliminate the payments on your second or third mortgage. If your mortgage is greater than the value of your home, Chapter 13 allows you to strip away junior liens. Any second or third mortgages or home equity lines of credit will be recategorized as unsecured debts.

IMPORTANT: If you have fallen behind on your mortgage payments, act now before your lender adds thousands of dollars of legal fees and costs to your bill by initiating a foreclosure.

So Should I Chapter 7 or Chapter 13 to Stop Foreclosure?

You want to stop a foreclosure. Only the automatic stay of a bankruptcy filing will stop the foreclosure auction. Should you file Chapter 7 bankruptcy or Chapter 13 bankruptcy? The answer depends on your intentions toward the property and your larger financial goals. If you are ready to let the property go, then in most cases, Chapter 7 bankruptcy is your best bet. If you want to keep the property, or buy some time to explore other options (like modifying your mortgage or selling the property), then Chapter 13 is probably a better option. Either way, you should seek the advice of an experienced bankruptcy lawyer to help you weigh your options.

Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 624,753 U.S. properties in 2018, down 8 percent from 2017 and down 78 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005, as reported by Attomdata. Nonetheless, thousands of foreclosures are currently being processed in the D.C. metropolitan region.

Foreclosure usually begins after a homeowner falls behind on mortgage payments for a certain amount of time. So the goal should be to stop collection efforts and establish a repayment plan ASAP. Saving your home is about much more than preserving your financial future. Often you are protecting your entire family legacy. In most cases, you can save the roof over your head.

How bankruptcy prevents foreclosure

When you file for Chapter 13 bankruptcy, the court issues an automatic stay which is how bankruptcy prevents foreclosure. The automatic stay prevents your creditors from attempting to collect, effective immediately. Even if your home is already scheduled for an auction, the automatic stay will immediately stop any action for at least two months. During that time, we will attempt to negotiate a repayment plan. In some cases, we may be able to eliminate second and third mortgages altogether.

If the goal is not to keep the property but to let it go, Chapter 7 bankruptcy may be a better option for you. The filing of a Chapter 7 will also start the automatic stay, too. But unlike Chapter 13, the purpose of filing a Chapter 7 is threefold: stop the foreclosure sale, buy some time to stay in the property, and completely discharge your liability on the mortgage.

Lee Legal helps homeowners prevent foreclosure

Every case is different, and the details of each circumstance can be complex. But an experienced foreclosure defense lawyer can explain all your options to you.

Over the last decade, Lee Legal has helped clients save their properties and get their lives back on track. We like what we do. Lee Legal approaches each case with the goal of facilitating second chances. To find out more or to schedule a free consultation, give us a call at (202) 448-5136. Reach out today and start the process of rebuilding your finances and moving on to a better future.

Flexible office hours for busy clients

Our Saturday office hours are between 9AM and 3PM in the Washington, D.C. office, located a block south of the Dupont Circle metro station (South exit). Here’s our address:

1250 Connecticut Avenue NW | Seventh Floor | Washington, D.C. 200

Street (meter) parking is generally more open and available on weekends. You must call from downstairs so we can escort you into the building. All doors to the building are locked on weekends for security. Please bring your driver’s license, passport, or other government-issued identification with your picture.

We work around your schedule

Often our clients cannot take time off from work or family during weekdays, so we offer flexible weekend and nighttime scheduling options for your convenience. We will work around your schedule. Call to set up an appointment to review your bankruptcy options.

An experienced Alexandria Virginia foreclosure and bankruptcy lawyer can provide you with comprehensive advice about how you can stop a foreclosure from happening to your home. Contact Lee Legal today if you are facing foreclosure in Virginia, Washington D.C. or Maryland. Call to schedule your consultation with a bankruptcy lawyer who can help you.

Stopping a foreclosure when you’re not too far in default

Repaying the amount owed to the lender is the best and easiest way to stop the foreclosure, but you must have the money in order to repay the debt. Most people don’t.

Instead, try to work out some type of mortgage modification. There are programs available to save people’s homes from foreclosure. Your mortgage company may reduce your monthly payments. Or you could be a candidate for a mortgage refinance.

These options, however, take time and require a lender’s approval. It is usually best to pursue these options before foreclosure proceedings start. One a foreclosure auction date is set, time is running out.

How to quickly stop a foreclosure in Alexandria Virginia

Once the formal foreclosure process is underway, often the best thing that you can do is to file for bankruptcy protection. As soon as you have filed the paperwork with the court, any pending foreclosure proceedings must stop. Lenders are prohibited from moving forward with the foreclosure process once you file bankruptcy. After filing bankruptcy, then you have the time to try to work something out with the lender, such as a mortgage modification.

Bankruptcy doesn’t just erase mortgage debt. In certain limited cases, a Chapter 13 can allow you to have second mortgage debt reclassified as unsecured debt, which would mean that your second mortgage lender could no longer foreclose if you didn’t pay in full. However, this is not always an option and you’ll need to discuss this option with your bankruptcy attorney.

Bankruptcy could help you keep your home by buying time to work out a deal with the lender or by getting rid of your other debts so your home loan becomes more affordable to you.

We keep our eye on the prize

At Lee Legal, we know that avoiding foreclosure and keeping your house is your top priority. We can help you to explore bankruptcy and other solutions to prevent foreclosure. Give us a call or contact us online today for more information on how we can help in your situation.

One method that you may consider to avoid foreclosure is refinancing your home. Refinancing is the process of applying for a new mortgage loan to pay off your old mortgage loan. The new loan may have a lower payment amount because you have a longer repayment term. Or you may be able to obtain a lower interest rate. If you are struggling with your current mortgage, theoretically refinancing could potentially help you to stop foreclosure.

While refinancing works under certain circumstances, however, refinancing is often not viable when facing foreclosure.

Can Refinancing Stop Foreclosure?

Too often, too little time makes refinancing an inadequate option to stop foreclosure. If an auction has been scheduled then it is generally too late to refinance. In many cases, it may be still possible to modify your mortgage. But refinancing is not an option late in the foreclosure process.

Also, you generally cannot refinance unless the property is worth more than you owe on it. In other words, if you owe $275,000 but the property is only worth $250,000, then a lender will not refinance your loan. In fact, you must have at least 20% equity to refinance for most properties. For a property worth $250,000, you must owe less than $200,00 to refinance. You usually can borrow only 80% of the value of your house. So unless you have equity, refinancing will not work.

Credit plays a role, too. If your credit is not excellent, you will not obtain a refinancing offer. Refinancing lenders will look upon a former mortgage default as a risk to nonpayment, regardless of a change in your circumstances. If you are in foreclosure, missed mortgage payments have already impacted your credit score. Refinancing may simply not be an option.

Does refinancing stop foreclosure? Yes, in theory. But most people do not qualify for refinancing once they are in foreclosure. There are other options, however, to stop foreclosure, including modification, short sale, and bankruptcy. An experienced foreclosure defense lawyer can help you choose which option is best for you.

Preforeclosure

If you fail to pay your mortgage for 30 days past the due date, the lender will likely enter you into their preforeclosure database. Most lenders, however, wait until you are at least 60 to 90 days delinquent before they initiate any formal action. The foreclosure process is expensive and cumbersome for mortgage lenders. Most lenders hope during preforeclosure that the borrower will cure the default without further prompting.

How quickly your lender will move to foreclose on your property generally depends upon the amount of equity in your home. Your lender will move very quickly if there is significant equity in the home. If your lender calculates that a foreclosure auction will cover its loan, then foreclosure will commence rapidly. But your the lender can (and will) take much longer if your home is under water. That is, mortgage companies take longer to foreclose if you owe more on the mortgage than the home is worth.

Notice of default

To initiate a foreclosure action, the lender issues a notice of default at least 30 days before they begin with the procedure to sell the defaulter’s home. To be valid, the notice must state that the borrower has breached the deed of trust and that the lender has the right to sell the property as a result. The bank typically mails the notice to the borrower’s address or posts to the door. Alternatively, your lender may personally serve you with the notice of default, although this is less common.

After a second 30 day period has passed, the lender must serve a further notice on the borrower. This “trustee sale notice” or “auction notice” must specify the place, date, and time of the foreclosure auction. The trustee sale notice will state the amount of your unpaid mortgage balance, plus accrued interest, contractual penalties, and cost of the foreclosure. The notice will also give the name and address of the trustee conducting the auction on behalf of the lender.

Foreclosure auction

Once the substitute trustee sets an auction date, the borrower has two options.

First, you can catch up the entire mortgage delinquency and fee balance (the “arrearage”)  within at least 11 days prior to the foreclosure auction. Or second, you can file for Chapter 13 bankruptcy protection. Chapter 13 allows you to repay your mortgage arrearage over a period of three to five years.

Foreclosure auctions are typically held at the courthouse or the offices of the substitute trustee. If there is any equity in the property, prospective purchasers will bid on the property. The winner must make a cash down payment on the spot. In many cases, however, the amount owed on the property is more than the property is worth. In those cases, the first mortgage holder may be willing to accept bids below what is owed on the first mortgage.

Deficiency judgment

If the property sells for more than the total all of the liens (mortgages and otherwise) and costs against the property, the former homeowner will be paid the difference. Obviously, this does not happen very often. After all, if there was equity in the home prior to the foreclosure, the borrower would have simply sold the home prior to the foreclosure.

In the majority of cases, the property will sell for far less than is owed on the first mortgage. At that point, the lender has two options: obtain a deficiency judgment or issue a 1099 for forgiven debt. The lender’s determination of which option to pursue depends upon the borrower’s last-reported income.

If the borrower has other assets (usually real property) or very high income, the lender will obtain a deficiency judgment, which will be a collectible debt against the former borrower. Once obtained, the lender can legally pursue collection efforts against the foreclosed-upon homeowner, including liening and garnishment. If the former homeowner’s income and assets are determined to be too low to pursue collection efforts, the lender can simply write off the debt and report to the IRS a 1099 statement of forgiven debt. The borrower will be liable for the the amount of the “forgiven” debt as taxable income for the year of the foreclosure.

Now that you know how foreclosure works, explore your options

Virginia, Maryland and the District of Columbia have the property market-stabilizing effects of our local federal government. Thus valuations and income levels are to a large degree inoculated to national trends. The above timeline is typical, but other scenarios are possible, especially for commercial property owners or second homes.

If you are facing foreclosure in the DMV, get advice on how to proceed in a manner best suited to your situation. Act quickly once you receive a notice of default. Call (202) 448-5136 to speak with a foreclosure attorney familiar with local foreclosure procedures.

What is Chapter 13 Bankruptcy?

If your lender has filed a Notice of Default against your property, you may have very limited time to act. If you can’t obtain a work-out agreement from your lender, Chapter 13 bankruptcy may be the only option available to you.

Chapter 13 bankruptcy allows you to pay off unpaid payments and late fees over time. To complete a Chapter 13 Plan, you need at least enough income to meet current mortgage payments plus some portion of the arrearage.

Chapter 13 will allow you to reorganize and pay off your debts over as long as 60 months. Or it can buy you time to have your agent find a buyer for the home and make a sale. Maybe you want to buy some time to modify your mortgage. Or negotiate a better repayment schedule. Or arrange a short sale.

As long as you file your Chapter 13 case prior to the foreclosure auction, the Automatic Stay prevents the auction from taking place at all.

The Automatic Stay

Filing a Chapter 13 bankruptcy triggers a powerful legal mechanism known as the Automatic Stay. The bankruptcy court orders your creditors to immediately cease all collection efforts, including foreclosure. If your home is scheduled for a foreclosure sale, the sale will be legally postponed while your bankruptcy is pending.

Mortgage companies in the Washington, D.C. area are savvy. To obtain the maximum benefit from Chapter 13, you should consult a bankruptcy attorney experienced with handling Motions to Lift the Automatic Stay.

If You Get a Notice of Foreclosure

When your receive a Notice of Foreclosure Sale, time is of the essence and you must act quickly. If you intend to vacate your residence and file a Chapter 7, then you should find another place to live and arrange to move. If you intend to stay in your home, however, you must immediately contact a bankruptcy lawyer in D.C. and prepare to file Chapter 13 bankruptcy to delay foreclosure.

Typically, foreclosure begins about three to four months after you fall behind on your mortgage payment. During this time, you should attempt an alternative measure to bankruptcy, such as loan forbearance, short sale, or deed in lieu of foreclosure. If these measures fail, however, and you receive a Notice of Foreclosure, then consider filing a Chapter 13 as a way to avoid or forestall foreclosure.

File Chapter 13 Bankruptcy to Delay Foreclosure

If you are overburdened with unsecured debts like credit cards, medical bills, and other types of loans, then Chapter 7 might be the right option for you. As a bankruptcy lawyer in D.C., I can assure you that if you are current on your mortgage payments, and your home in D.C. is your primary residence, then you will not lose your home in a Chapter 7 bankruptcy.

If you have missed just a few mortgage payments, however, you should consider filing for bankruptcy in D.C. under Chapter 13. Under Chapter 13 bankruptcy protection, you can get current on your mortgage over three to five years, eliminate loans above market value, and you will often be able to delay the foreclosure process in Washington, D.C. and Virginia by several months.