Foreclosure of a home occurs when a borrower falls behind on their home payment for a period of 6 months or longer. The lender will usually give what’s called a “Notice of Default” after falling behind 3 months. The trustee sale date for the home is usually 3 months after that. In California, nearly all homes must go through a non-judicial foreclosure before being auctioned off and/or going back to the lender.
Chapter 13 Bankruptcy
One option to avoid foreclosure is to file what’s called a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, a borrower is given the option of paying back the secured arrears over the course of 3 – 5 years. However, one must first prove to the court that the Chapter 13 filer has the ability and income to pay back the arrears during this time.
Many people who lost their jobs or who had lower income for a period of time and then were able to reestablish themselves, find themselves in this position. For many who are in this category, the Chapter 13 bankruptcy may provide a way to keep one’s home and avoid foreclosure. Furthermore, one might also be able to eradicate a junior mortgage. For more information on this, see the Chapter 13 bankruptcy tab.
Loan Modifications/Foreclosure Defense/Predatory Lending
Esquire Law Center makes themselves clear that we do NOT do loan modifications. The reason for this is very simple: THEY ALMOST NEVER WORK. Being that honesty and integrity is highly valued at ELC, we make it a point to stay away from practices that probably will produce no fruit for our clients. We do not want to sell mirages to our clients who are vulnerable and trusting us to look out for their best interests. Furthermore, we know that people are extremely vulnerable right now and the lure of such tactics could easily reel in unsuspecting homeowners. The market for such attorneys who promise such illusions is huge right now, but the client’s interest should ALWAYS be valued over the quick buck. Therefore, ELC completely stays away from such practices. If some other attorney or firm has promised or close to promised you a result on modifying your mortgage, please come in and talk to us before your proceed. You could very well end up saving thousands of dollars in attorney fees.
In a short sale, the borrower sells the home at a lower price than the loan balance if the bank agrees to such a sale. Obviously, this should only be used if other options have been exhausted. The bright side to a short sale is that the negative impact of a foreclosure is spared from one’s credit. Furthermore, this may give more time for the borrower to plan the next steps afterwards.
Deed in Lieu
In a deed in lieu, the lender accepts the deed back to the house without the process of foreclosure. This could save the borrower from having the negative credit bang of a foreclosure. However, there are many tax consequences to this procedure and is therefore usually not recommended.