Foreclosure is the legal course of action of termination and taking away the right of the mortgagor (debtor) to his reasonable right of debt emancipation. This is usually a manner in which the mortgagee (creditor) gets a court order preventing and stopping the debtor from his right to a property.
Normally, when filing a bankruptcy, there is a reaffirmation agreement done between the creditor and the debtor.
The reaffirmation aggreement is examined, guided, supervised, and approved by legal counsel and by the court. Now, under this agreement, there is what we call security interest from a debtor who mortgages and pledges their property, (i.e. their house), and other valuable things used as a guarantee and as an offer of security.
Now the question is, when does the foreclosure happen and how is it done?
Foreclosure occurs when a mortgage goes in default for non-payment OR other breaches of the mortgage agreement. The creditor can move to foreclose (remove the debtor as an owner of the property) and gain possession of the premises.
Even during foreclosure, consumers do not have to be blackmailed and/or harrased by creditors. There are different protections against creditors to ensure there is fair collections (Fair Debt Collection Act).
However, in life, sometimes, there are unexpected things that happen which are really hard for a consumer to handle. Trials and obstacles do happen to everyone.
Excessive debt, mounting bill obligations, inability to continue working due to medical conditions, squabbles with co-owners, divorce, job transfer to another state, layoffs, and/or medical emergencies are just a few exmaples.
The law allows for us protections when the circumstances are such that consumers cannot keep up with their payments.
Chapter 7 and chapter 13 allow you protections to keep your home. Most states allow for a home exemption in which a certain amount of equity is allowed and protected from your creditors.
In a chapter 7, you must be current in all payments to your mortgage company, or they will not likely reaffirm your loan, thus allowing you to keep your home.
In a chapter 13, the court will allow you to craft a plan where the amount in arrears can be repaid as part of the plan. Chapter 13 can be the only option a debtor has to save a home.
In general, foreclosure legal actions and procedures vary from state to state. In places where loan a agreement or contract is used, less than one year is given to the home owners to stay in the property. In places where arrangement and trust deeds are practiced, less than four months is given to the seller before the sale by the trustee.
In addition to that, a certain length of time of redemption is provided by nearly every single state. This could only mean that paying all foreclosure costs, regaining control of the property, the back interest and the missed principal payments are just some of the irrevocable rights of a seller over a certain period of time.
Foreclosure is usually initiated by a mortgage holder for some period of time especially when a default happened or a failure to meet payments responsibilities.
Canada, the United States of America, and other countries use a number of foreclosure methods, but the most common of them are the following: foreclosure by judicial sale and the foreclosure by power of sale which is also known as the non-judicial foreclosure.
Meeting debt and financial responsibilities could be hard for anyone in a bad economy. To learn more about foreclosure, bankruptcy, and your options please contact our office at (509) 927-3840.