You may be behind on your bills, including your monthly mortgage payment. As a result, your lender may have initiated foreclosure proceedings, or may have given you notice that they intend to do so in the future. You may not know that the bankruptcy process can actually help you keep your home by giving you more breathing room to make payments that you have missed. You can keep your home during the bankruptcy process, so long as you continue to make payments on your mortgage and repayment plan.
A Miami bankruptcy lawyer at Consumer Law Attorneys can explain more about how you can use bankruptcy as a means to avoid foreclosure.
Understanding Florida’s Foreclosure Process
Your lender will begin the process of foreclosure when you have fallen 90 days or more behind on your mortgage payments. They will not begin foreclosure when you have missed only one payment. The lender will send you a Notice of Default, which will tell you how much you owe and how to cure the default.
Florida is a judicial foreclosure state, meaning that an action to take your home must go through the court system. A foreclosure unfolds much in the same way as any other type of court case. Your lender files a complaint in court, and serves it on you. As the defendant in the foreclosure action, you file an answer with the court. Since you are entitled to due process, you
The court will hold a hearing on the foreclosure. If you are contesting the process, you need to to show up at this hearing. The judge will consider your argument. If the court upholds the foreclosure, the judge issues an order. In that event, your property will be sold at an online auction to the highest bidder, and you may be legally responsible to paying any shortfall to the lender if the proceeds are less than the amount that you owe.
How the Automatic Stay Works
The automatic stay is a key part of the bankruptcy process that exists to protect both debtors and creditors. The automatic stay in Florida freezes everything in place as of the time that you have filed for bankruptcy. Your creditors cannot take any action to collect the debt from you while you are in the midst of the bankruptcy process. If they violate the automatic stay, creditors can face serious sanctions from the court.
This halt includes any effort to collect on your mortgage payments. If the lender has already initiated the foreclosure process, bankruptcy will halt it. Your mortgage payments are something that can be addressed through the bankruptcy process, so your lender cannot do anything to collect what you owe outside of it.
Chapter 13 vs. Chapter 7 for Miami Homeowners
There are two types of consumer bankruptcy, and your continued homeownership may be protected through each of them. Chapter 7 bankruptcy is a liquidation. You surrender your personal property to the bankruptcy trustee (subject to exemptions provided by Florida law) in exchange for the discharge of your unsecured debt.
Florida has a homestead exemption that is much more favorable than those in other states. You can protect your primary residence in Chapter 7 bankruptcy regardless of the value of your home. To be clear, Chapter 7 bankruptcy does not wipe out any arrears in mortgage payments, since the debt discharge only applies to unsecured debt. To keep your home, you need to reaffirm your debt to the lender.
Chapter 13 bankruptcy is a restructuring that is meant to give you more time to pay your debts and potentially reduce the amount that you owe. Unlike Chapter 7, there is no liquidation of your assets. If you have fallen behind on your mortgage payments, the amount that you owe the lender becomes part of the money that you will need to pay as part of your restructuring plan. You need to keep making payments for as long as your plan lasts. If you do this, plus you continue to make your scheduled monthly mortgage payments, Chapter 13 bankruptcy can ensure that you do not lose your home when you are in financial distress.
Speak with a Miami Bankruptcy Attorney
A bankruptcy lawyer in Miami can work through your options for maintaining ownership of your home when you are experiencing a difficult financial situation. At Consumer Law Attorneys, our lawyers work to stop foreclosure in Florida, either by challenging the process itself or by guiding you through bankruptcy. The first step is for you to speak with one of our attorneys during a free initial consultation. You can schedule an appointment with a lawyer by filling out an online contact form or by calling us today at (877) 241-2200.
