It’s been a rough year financially for many of us. Many people have fallen behind on their mortgages. In fact, it’s estimated around 9.9 million Americans are at least three months behind on their housing payments.
It goes without saying, none of these people want to lose their homes. But foreclosure is a scary reality for many people currently. If you’ve fallen behind through unexpected events, you may also be facing this reality, but it might not be too late to stop it.
So just when is it too late to stop foreclosure?
When Is It Too Late to Stop Foreclosure?
Unfortunately, there are no hard and fast rules to answer this question. It varies on an individual case by case basis. So the best advice we can give you is to find a local lawyer who gives free initial consultations, and who can give you tailored advice to your individual circumstances.
This said, there are some rules lenders (so your mortgage company) must follow before they can proceed with a foreclosure.
First, your lender must send you a notice of default and give you an opportunity to rectify the balance. The lender will set a deadline, but these are usually negotiable.
If you’re unable to repay the balance, the lender may proceed with foreclosure. This is usually 90 days after the last payment. At 120, the lender has to issue a notice to the owners of intent to sell the property.
If this proceeds, the property is then sold at a public auction. Foreclosure can be stopped all the way up until the property deed is transferred to another owner.
How to Stop Foreclosure
The easiest option is to pay back the money owed. People often do this through borrowing from friends and family, taking out a loan, or applying for a loan modification. Obviously, this route isn’t an option for many people.
This is why so many people opt to declare bankruptcy to stop foreclosure. A bankruptcy will halt foreclosure immediately. Depending on the type of bankruptcy you file under, you may even keep your home.
The two most common types of bankruptcy filed under are Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, all your possessions are liquidated to pay your debts. You are absolved of all liability to any remaining debts after.
In a Chapter 13 bankruptcy, you would be able to keep your home and negotiate a long term debt repayment plan. Usually, these are over three to five years.
Regardless of which chapter you file for, you’ll be issued an automatic stay when you do. This prevents your lender from asking for payment or moving ahead with foreclosure proceedings.
The final option is to sell your home before foreclosure. Many homeowners opt to do this as they may get a fairer price than at a public auction. There are many options to help you with this, including cash buy property solutions whose mantra is “we buy houses with cash”.
Research Your Options
Hopefully, you now know the answer to the question “when is it too late to stop foreclosure?”. But make sure you don’t panic and rush into any decisions. Research all your options before you make any decisions.
For more real estate and financial advice, check out the rest of our blog.