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Foreclosure: How Bankruptcy May Help You Keep Your Home

Posted on in Bankruptcy

The economy may be showing some signs of improvement, but the outlook remains bleak for many Illinois homeowners. The Land of Lincoln has one of the highest home foreclosure rates in the country. One in every 663 housing units in the state received a foreclosure notice in December. Many homeowners fell behind on payments due to a job loss, sudden illness, portfolio reversal or other temporary income loss. But if you fall even three or four payments behind, it can be almost impossible to catch up. If the bank is trying to take your home, Chapter 13 bankruptcy may be your best option.

Automatic Stay

The moment you file your voluntary petition, an automatic stay goes into effect. No creditor can take any adverse action against you and no foreclosure sale can go forward without special permission from the bankruptcy judge.

The stay applies regardless of the collection stage you are in. It does not matter if the bank is calling every day demanding money, your property is in pre-foreclosure, or a sale date is scheduled for the next day.

Extended Repayment

Whether you are a few hundred dollars behind or a few thousand dollars behind, you have three or five years to catch up. You propose the repayment schedule and, in most circumstances, the bank must accept the terms you offer. All this time, the automatic stay remains in effect.

Loan Modification

It is nearly impossible to get a loan modification outside of bankruptcy and without an attorney. Only about one in five homeowners who apply through HAMP receive a permanent modification. The lender often looks for ways to disqualify the application – a handful of missing documents, missing a deadline by a few days or an income that is a few dollars too low – as opposed to looking for ways to help.

With a bankruptcy lawyer, it is a different story. If the judge orders the matter to mediation, as is often the case, the bank must negotiate in good faith. That means no denials based on technicalities. Moreover, when your attorney speaks to their attorney, things tend to get done faster.

If you need to save your home, and you want to keep it over the long term, contact the experienced Crystal Lake bankruptcy attorneys at Newland & Newland, LLP. We have four office locations in the Chicagoland area.

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