If you own a home and are 2 months or more behind in your house payment, you need to start planning on doing something about it as soon as possible. Foreclosure specialists can help you negotiate with your lender to lower your payments, and a bankruptcy attorney can help you file bankruptcy to save your home, but you must act quickly. (You can get a free bankruptcy review to learn your options with one of our bankruptcy attorneys.) If you do not anticipate being able to pay your mortgage for several months due to a sudden drop in income or other unusual circumstance, filing bankruptcy with a bankruptcy attorney before the beginning of formal court proceedings will save you $100’s, if not $1,000’s of dollars in service fees, late fees and other fees mortgage companies will tack on to the total you owe them. In fact, by not doing anything and not making your monthly mortgage payment, you may discover that you owe the creditor more than the original loan amount after all the late fees and extra charges are added on.
However, if you have found you are several months behind in our mortgage payment and/or you are interested in the procedure of foreclosing on your home, below is the normal procedure followed by creditors to foreclose on your property.
Complaint is Filed
Before a creditor or mortgage company can begin the procedure of taking possession of your home, they have to file a Complaint, Motion and Affidavit with the Common Pleas court in the county where your home is located. A copy of your signed contract and mortgage or title is attached to the Complaint to prove that the mortgage company has the right to foreclosure on your home. You will receive a copy of these documents when they are filed, which is called “serving the Complaint.” A Hearing Notice is also enclosed allowing you five (5) days to request a hearing to dispute the debt. Of course, if you know you owe the money you do not have to request a hearing, but requesting one can delay the foreclosure process because the court will have to appoint a hearing date in which you will appear and state your side of the story. The Judge will normally grant the Motion in favor of the creditor unless you can prove the debt or the amount owed is not accurate and the foreclosure proceeding will continue.
Because Complaints are served by the court by certified mail and personal service, and must be properly served before the process can continue; some people will not accept certified mail thinking it will “buy them more time.” However, the opposite is true. If good service cannot be obtained by certified mail, the Sheriff will be dispatched out to serve you the Complaint documents in person, which could be embarrassing. Ordinary mail service is also performed by the creditor filing a Praecipe with the Clerk of Court and if the post office does not return the piece of mail, the court considers this to be notice of proper service.
After service of the Complaint and other documents are done, an Order is then sent to the Judge for his/her signature. Once the Order is obtained, the mortgage company will them begin the process of actually repossessing the home.
Filing Bankruptcy After Service of Complaint
I have had several clients decide to file bankruptcy at this point because it can be a scary situation when the court or Sheriff serves foreclosure documents. However, it would have been to their advantage if they would have filed before this period of time. Even if past due arrears are owed on a home, these arrears can be included in the Chapter 13 bankruptcy petition and paid over a period of 3 to 5 years, stopping all additional service and late fees.
But, if you are in a situation where you have waited this long and decide to file bankruptcy now, the bankruptcy petition will delay the foreclosure procedure for a short period of time. This is because the creditor will only be able to repossess the home but will never be entitled to a money judgment because you filed bankruptcy. This causes the creditor to re-file additional paperwork with the court in order to proceed and will help the debtor “buy some time,” especially if he or she is planning to surrender the home and get rid of the debt entirely.
The Next Step
Repossessing a mobile home is different from foreclosing on real property (real property is anything attached to God’s green earth.) That’s because a mobile home is considered to be personal property. It is easy for a truck to hook up the mobile home and return it to the creditor, but that would be impossible for an actual home attached to a piece of land. Instead, real property must be sold and/or the title removed from your name.
The foreclosure procedure for real property involves posting a notice in the newspaper, allowing time for bids and finally setting up a time for the Sheriff’s sale. If payments have not been met to satisfy the creditor, the Sheriff will deliver a notice giving you a period of time (normally 30 days) to vacate the property. At this point, you better have a place to move to or money to pay all the past due payments, late fees and extra added-on charges. Sheriffs have been known to physically enter the home and set the furniture and anything else outside on the lawn in order to repossess the home because people still refuse to move after being given this “grace period” to move on their own. Again, this would be a very embarrassing situation for you and your family and will probably result in damage to your household goods and furnishings.
How Long Does All This Take?
Because every mortgage company is different and has different collection methods, it could take from 2 to 9 months for everything to occur and you be ordered to move from the home. While it is not suggested that you live “rent free” in your home until the last minute before the Sheriff sets you out on the street, if you are severely behind in your mortgage payments and cannot afford to keep the house, use the next few weeks to save for a down payment on a rental and move as soon as possible.
Or, if you want to keep the home, you can file a Chapter 13 bankruptcy with a bankruptcy attorney as soon as you realize you are 2 months behind in your payments and include those past due payments in your Chapter 13 Plan so they will be paid with your other debts.