How could bankruptcy prevent a foreclosure on my Florida home?

It may be possible for Floridians to prevent the foreclosure of their home through filing for bankruptcy.

According to the Clerk of the Courts for Miami-Dade County in Florida, there have been 3,658 foreclosure filings so far this year. It is a sad fact that so many people every year lose their homes, often as a result of an inability to make mortgage payments.

There are several options for people facing foreclosure proceedings. Here, we examine those choices as well as how bankruptcy could help prevent action from taking place.

Before foreclosure begins

The best way to prevent a foreclosure is to take action at the first sign of trouble. As soon as a homeowner believes he or she may have difficulty making payments, the mortgage provider should be contacted. The lender may be willing to work out some type of plan, such as reducing payments temporarily or giving the homeowner more time to get money together. There is also the federal Making Home Affordable program, which gives people advice on how to cope with financial difficulties.

The foreclosure process in Florida

Once a homeowner is 120 days delinquent on payments, the mortgage provider may file a case to initiate a foreclosure. The lender must send a letter to the homeowner noting that the loan is in default as well as the action that could satisfy the default. The letter must also provide a date – usually within 30 days – by which the debt must be satisfied or else the home will be sold.

The Florida Fair Foreclosure Act, signed into law in 2013, expedited the process of taking someone’s home. In other words, homeowners have less time to request a forbearance, loan modification or other alternative because any lienholder may request that the foreclosure move through the process quicker.

How bankruptcy may help

If someone has exhausted all other options, filing for bankruptcy may delay foreclosure. Filing for Chapter 7 or Chapter 13 creates an automatic stay, which means that creditors may not continue their collection activities. Therefore, the sale of a home could be delayed for as long as three or four months. In that time period, it may be possible for the homeowner to gather the money necessary to satisfy the loan. It should be noted that there is the possibility that the lender could file a motion to lift the stay.

Another option is to file for Chapter 13, which is prompts consumers to pay off debts through a repayment plan that spans years. This could enable someone to keep his or her home.

Bankruptcy proceedings are typically complex and should be handled by a qualified professional. Anyone who has questions about this topic should speak with a bankruptcy lawyer in Florida.