Do I Have to File Bankruptcy After Foreclosure?
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No, you are not required by law to file bankruptcy after a foreclosure.
When you foreclose on a home after you have fallen behind your mortgage payments, you will lose your home. But if you want to keep your home and file for Chapter 13 Bankruptcy instead, a repayment plan will help you keep your home. Alternatively, you can file bankruptcy following foreclosure to wipe out debt you owe.
Foreclosure
To set the foreclosure and repossession procedure of your home into motion, your lender must file a Complaint, Motion and Affidavit with your local Common Pleas court. Once you have been served the Complaint, meaning you have received a copy of all the documents your lender has filed along with a Hearing Notice you have the right within five days of receipt of the the notice to request a hearing to object the complaint. If your creditor’s Complaint is legitimate, you do not have much leverage and typically the judge will not grant the motion in your favor so that proceedings will continue as scheduled. However, by requesting a hearing you can delay proceedings if extra time will work to your advantage.
Keep in mind that Complaints and other essential correspondence is always mailed by certified mail and there will be a record of when you received each document. Rejecting certified mail will cause more harm than good. After you have acknowledged the receipt of the Complaint and all documents have been signed and notarized, an Order is sent to the Judge to be signed. The signed Order gives the creditor the green light to begin the process of repossessing the home.
Mortgage Debt in Foreclosure
First, your property must be sold so that your name can be removed from the title and your debt cleared. Foreclosed homes are posted in the newspaper so potential buyers can submit their bids. Then a time for the Sheriff’s sale is scheduled. During this time, you still must make mortgage payments to reserve your right to stay in the home. If you are not able to make payments, you will receive a Sheriff’s notice to vacate the property, typically within 30 days. Your debt obligation is cleared and foreclosures will stay in your credit report for seven years. You no longer have the title to the home.
If you have fallen behind your mortgage payments and have an impending foreclosure hovering over your head, there are many advantages to filing Chapter 13 Bankruptcy before the lender proceeds with foreclosure. A Chapter 13 Bankruptcy will allow you to restructure payments, keeping you in your home and stopping all those service and late fees associated with foreclosure proceedings. Even if you already owe past due bills, they can be included in the Chapter 13 Bankruptcy and paid over time. It is critical that you take action early on to avoid complicating the process. The quicker you act, the less opportunity you give your mortgage lender to punish you with fees and forced removal from your home.
