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Irvine Bankruptcy Lawyer / Stopping Foreclosure

If you are in default on your mortgage and facing foreclosure, it can feel like you are running out of time and options. The Law Office of Charles A. May can provide you with both. By filing for bankruptcy, we can put the brakes on the foreclosure while we work out a solution that gives you lasting relief, including keeping your home in many instances. See below for more information regarding your options to fight foreclosure, and call our office for a free consultation and immediate assistance stopping your home foreclosure in Irvine or Southern California.

What Is Foreclosure?

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments. This is generally accomplished by selling the property used as collateral for the loan. In California, lenders can proceed with a non-judicial foreclosure, which means they can foreclose without going to court. Non-judicial foreclosure is a fast process, which means you have less time to act to protect your interests.

Steps to Take Immediately After Receiving Foreclosure Notice

  1. Verify the Foreclosure. The first step in addressing a foreclosure is to verify the validity of the foreclosure notice. Make sure it comes from your lender and that all the information is accurate. If the lender does not acknowledge the payments you have made, you need to take steps to clear up the miscommunication.
  2. Get Legal Advice. Consulting a consumer bankruptcy law firm like The Law Office of Charles A. May can provide you with valuable insights into your specific situation. It is crucial to act quickly, as California’s foreclosure timeline can be quite rapid.
  3. Review Your Finances. Take an honest look at your finances to see if it is possible to catch up on your mortgage payments. Sometimes, temporary financial struggles can lead to foreclosure notices. If your income has stabilized, you might be able to negotiate a repayment plan with your lender.

Bankruptcy Can Stop Foreclosure, Temporarily or Permanently

Bankruptcy is a viable option to halt the foreclosure process, at least temporarily. Filing for bankruptcy will initiate an “automatic stay,” which stops most collection activities, including foreclosure. You remain in your home while the stay is in place, allowing you to breathe easier while you work out a permanent solution.

While Chapter 7 is the preferred form of bankruptcy for most people struggling with debt, it does not always deal effectively with a foreclosure in the long run. Chapter 7 will not rid you of your mortgage debt; instead, it eliminates unsecured debts such as credit card bills and medical debt. If a Chapter 7 discharge could give you a fresh start and enable you to make your mortgage payments going forward, then Chapter 7 might indeed make sense. Otherwise, you want to look at Chapter 13.

Chapter 13 involves setting up a three or five-year repayment plan to pay off your debts. As part of the process, you can adjust your unsecured debts, only paying a portion of what you owe, and obtaining a discharge of the rest at the end of your bankruptcy. Chapter 13 also allows you to cure your mortgage default by rolling your missed payments into your payment plan, eliminating the grounds for foreclosure. So long as you make good on your payment plan, you will be safe from foreclosure. Through Chapter 13, you can also make your mortgage more affordable by stripping away second or third mortgages, or altering the terms of a first mortgage so that it more closely approximates the market value of your home. If you are underwater or upside down on your mortgage, Chapter 13 can “cram down” your mortgage or bifurcate your loan into secured and unsecured portions, with the unsecured portion adjusted and eventually discharged.

Non-Bankruptcy Options to Stop Foreclosure in Southern California

Other options are typically available to deal with foreclosure, although they might not be as beneficial as bankruptcy. These alternatives include:

  • Loan Modification: Altering the terms of your mortgage to make payments more manageable. Expert assistance is needed, and there is no guarantee your lender will accept a modification, but it might be worth considering.
  • Short Sale: Selling the property for less than the amount due on the mortgage, with the lender’s permission. The lender accepts the proceeds as satisfaction of the debt, relieving you of liability for the deficiency (the amount remaining on the mortgage after the short sale).
  • Deed in Lieu of Foreclosure: Transferring the title of the property to the lender to satisfy the loan. Like a short sale, you lose the home, but you are relieved of the liability to pay the mortgage, including being hit with a deficiency judgment if the lender were to foreclose and sell the home for less than what you owe.

Contact The Law Office of Charles A. May to Stop Foreclosure

You do not have to go through this stressful time alone. At The Law Office of Charles A. May, we focus on consumer bankruptcy law and can provide you with tailored advice to best navigate your foreclosure challenges. Reach out to discuss your options and take the first step toward protecting your home and financial future. Call today for a free consultation with our dedicated bankruptcy lawyer.

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