I missed a mortgage payment – how fast can the bank foreclose on my home?
In Washington, you must be at least 90 days behind on your mortgage payments before the mortgage company can proceed into the foreclosure process. There are several notices that must be served on the homeowner following the initial 90 days of missed payments before foreclosure may commence.
The first notice you will receive is the Notice of Pre-Foreclosure Options. This Notice will provide the homeowner with options that may be available to them that will assist in preventing a foreclosure. The homeowner may request a meeting that may lead to a loan modification or a repayment plan. It may not lead to any resolution, but, at a minimum, it will buy the homeowner additional time before the foreclosure process begins.
The next notice the mortgage company will send is the Notice of Default.
The mortgage company may send this Notice of Default anytime after at least 30 days have passed since the Notice of Pre-Foreclosure Options was served. This notice provides the homeowners 30 days to bring the loan current. In the alternative, it allows the homeowner to request mediation via a Housing Counselor or an attorney.
If the homeowner ignores this notice or is not successful in mediation, the next step is the Notice of Trustee’s Sale. This notice formally starts the foreclosure process. It cannot be served until at least 30 days have passed since the Notice of Default was served. The option for mediation ends 20 days after service of this notice.
The Notice of Trustee’s Sale must be publicly recorded and will provide a date that the foreclosure will be held. The Notice must provide at least 120 days notice of the sale date. If nothing is done to stop the foreclosure before the sale date, the home will be sold to the highest bidder. The homeowner may remain in the home for up to 20 days following the foreclosure sale. If the homeowner does not then voluntarily vacate the home, an eviction notice may be issued to force the homeowner to vacate and surrender the home.
Foreclosure is pending – can a bankruptcy help?
If a homeowner is not able to bring the loan current nor reach an agreement through mediation, bankruptcy will stop the foreclosure. You may file either a chapter 7 or chapter 13 bankruptcy to stop a foreclosure sale. Which chapter makes the most sense depends on some factors that the attorney will discuss with you.
Chapter 7 Bankruptcy and Foreclosure
When a bankruptcy case is filed, all collection actions must stop immediately. This is called the Automatic Stay and it prevents a foreclosure from moving forward. The filing of a chapter 7 bankruptcy will stop the pending foreclosure for at least a few months while the homeowner goes through the bankruptcy process.
If the homeowner does not wish to keep the home long term, but needs some additional time to save some money to move out, chapter 7 bankruptcy may be a good option. The chapter 7 bankruptcy will not discharge the debt owed to the mortgage company, but it will allow the homeowner more time to vacate the home and prevent the mortgage companies from seeking any losses or fees from the homeowner. The assigned bankruptcy trustee may step in to attempt to sell the home within the bankruptcy process. This can help the homeowner remain in the home longer.
Chapter 13 Bankruptcy and Foreclosure
A chapter 13 bankruptcy allows a person to pay debts back over a period of up to five years. If a homeowner wishes to keep their home but cannot come up with the missed payments in a short amount of time, chapter 13 bankruptcy may be a good option.
The filing of a chapter 13 bankruptcy will stop the foreclosure sale and discharge unsecured debts. The homeowner will propose a plan to make payments through the bankruptcy that will make the regular monthly mortgage payment plus enough additional to pay back the missed payments over a period of up to five years.
Another option for the homeowner is to sell the property within the chapter 13 bankruptcy or to request a loan modification from the mortgage company.
Chapter 13 bankruptcy gives the homeowner time to work to keep the home, to seek modification of the loan or to sell the home and retain some or all of the equity.
When should I file for bankruptcy, before or after foreclosure?
A homeowner will want to contact an experienced bankruptcy attorney as soon as they receive any of the notices mentioned above from the mortgage company. In most cases, you will want to file bankruptcy prior to the foreclosure as this will provide the most options to the homeowner.
Why should I contact Navigate Law Group if I am facing foreclosure?
I have over 28 years of experience working with people facing financial hardship and often foreclosure. If a notice regarding foreclosure has been served, time is of the essence. Many people have a fear of contacting an attorney. They are worried that the attorney will speak in a way that they don’t understand, charge them a lot of money and then not help them in a meaningful way. I offer a no charge consultation during which we will discuss your specific situation. I strive to not use “lawyer speak” whenever possible as I want to make sure my clients understand their options so that they are able to make decisions that will be best for them. If you decide that bankruptcy is a good option for you, we will discuss the differences between chapter 7 and chapter 13.
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Every legal issue is very unique. Accordingly, the information in this blog is intended as general education material and not as legal advice. If you think you may have a legal issue, you should consult an attorney.