Effects of Chapter 13 Bankruptcy on Foreclosure

Every year in the US, a lot of people lose their precious homes due to foreclosures and the cases are constantly on the rise. There are a number of reasons for the bankruptcy and foreclosures but the people who have to actually deal with the process are the only ones who can describe what it is like to leave their dear property. To understand the process of a foreclosure, it is important to first know what a foreclosure is and why does it happen.

What is foreclosure process and why does it happen?

A legal process in which an action is taken by the state authorities against an individual or a group when there is failure in making the specified payment on time on their mortgage and the lender has the right to take over the property to meet their payments regardless of the reason of the failure. The details of the process of foreclosure are specified in the Chapter 13 of Bankruptcy and the proceedings and notices, and the amount of time depends on the nature of the case. Foreclosure cases usually take 5 to 6 months for the finalization of the case. The action of foreclosure is a detailed one comprising of a number of orders, notices and hearings.

What is the Process of foreclosure in Florida?

This problem arises when the borrower isn't able to pay on time and it can be anything from the mortgage payment, insurance dues on the property or failure in paying property taxes. Short collection sales are followed by negotiations between the lender and the borrower and if the problem continues, the Notice of Default is issued which states all the details of the due payment with the late payment charges and other fines. After the Notice of Default has been sent to the borrower, the mortgage lender files the Lis Pendes or the paperwork in the court which specifies that the lender is going to sue the borrower at the failure of payments and the borrower is notified about the lawsuit terms.

Next comes the Notice of Action which is printed in the newspaper, which states that the mortgage holder has failed to pay the dues and is required to complete the payments on the date given on the current notice. This works as an official signal and begins the foreclosure action. It consists of the lawsuit aiming at evicting the borrower from the mortgaged property by posting the date and time of the auction that will be conducted to gain back the payment that were not completed.

After the lawsuit, and during the time of 3-4 weeks to auction the owner has an option to pay all the dues to the lender and can gain back the full ownership of the mortgaged property and all the auction proceedings will be halted. If the borrower still fails to pay the dues, the foreclosure reaches its last step, the Sheriff's sale where the final auction of the property takes place at the county courthouse and the highest bidder wins the property. At this point, the borrower loses all right to the property and the documents of the property are transferred in the name of the new owner's name. This completes the foreclosure process and the files, and formalities are completed.

How to avoid foreclosure?

Though it is almost unavoidable after the property has been taken over, the borrower can do a few things which would help him/ her in dealing with the banks and lawsuits. A good lawyer can be a very useful tool in dealing with the case of foreclosure and can also help the borrower in communicating with the mortgage lender. These are the specifications of the foreclosure under the chapter 13 and must be understood well to avoid bankruptcy and loss of property.

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