If you find yourself in a situation where you have fallen behind on your mortgage payments, and you believe there's a foreclosure notice around the corner, then you may benefit from a consultation with a bankruptcy attorney. However, if you have already received a foreclosure notice, there may still be options available to you. The following are a few possibilities that bankruptcy may offer you.
A bankruptcy may save your home under certain conditions
If you have fallen behind in your mortgage payments, but you can demonstrate to a bankruptcy judge that you have the ability to stay current with your mortgage payments, the delinquent payments may be tacked on to the end of the mortgage. An attorney can assist you in filing for Chapter 13 bankruptcy, which reorganizes your debts, so you can pay them off.
It may be possible to discharge a second mortgage through bankruptcy
If your second mortgage is unsecured by the equity in your home, it may be possible under a Chapter 7 bankruptcy to discharge the second mortgage. The reason why this may be possible is that without any equity in the home, the secondary mortgage had become unsecured debt. It is important to understand that under no circumstances will you go through bankruptcy and get a free house. If your secondary mortgage is discharged, your house will still go through foreclosure, but you won't be saddled with debt from the second mortgage.
A bankruptcy may protect you after a foreclosure
If you go through a bankruptcy, an attorney may be able to stop a lender from billing you after the foreclosure process is finished. It is not uncommon for your house to go without any maintenance from the time you move out until the time it is sold. This results in a loss of value, so when it is sold at auction, it is sold for less than it would have been worth in better condition. The lender may bill you for the difference between your outstanding mortgage and the price the house sold for. The lender may also charge you for the expenses involved with auctioning the house. A bankruptcy attorney can work toward stopping this from ever happening.
If you fall behind in your mortgage payments, it may be possible to save your home through a Chapter 13 bankruptcy. It may also be possible to discharge a second mortgage if you have no equity in the home. It may also be possible to prevent large bills from accumulating after the foreclosure. Furthermore, it should be noted that the last two options, will not mean you can keep your home, but a bankruptcy attorney can mitigate financial burdens from the foreclosure.
Contact a local bankruptcy lawyer to learn more.