Strategies for Dealing With a Florida Foreclosure
Many people in South Florida today are finding themselves facing foreclosure. We can offer several strategies for dealing with a foreclosure. There may be several defenses available to you in a State Court foreclosure, as discussed below. There are also bankruptcy options. A Chapter 7 bankruptcy may allow you significant time in the home with an ultimate discharge of any obligation under all mortgages. A Chapter 13 provides an opportunity to reinstate a mortgage over five years. In certain cases a Chapter 13 may allow the home owner to strip off a second mortgage. Chapter 11 may be a good option for those who don’t qualify for a Chapter 13. See our separate discussions on Bankruptcy Planning and Involuntary Bankruptcies.
Foreclosure Defense Attorney
We can assist you in defending a foreclosure action. Contact us if you have been served with a foreclosure lawsuit. Make sure you do not allow a default to be entered. We can defend and make sure the lender complies with all legal requirements. We can review the attachments to the foreclosure complaint (the note, mortgage and possible assignments) to see if your lender has complied with all Florida and Federal law and is the proper party to bring the foreclosure action. We will also determine if the lender has violated the Truth in Lending Act or other State or Federal requirements.
You may also want to consider a bankruptcy filing as part of the foreclosure defense. A Chapter 7 filed before, during or after the foreclosure lawsuit will discharge any obligation on the mortgage and may provide you with additional time in your home.
The New Foreclosure Laws
Foreclosure cases filed after July 1, 2013 come under the new foreclosure laws which were designed to speed up foreclosures. It also reduces the statute of limitations for the lender to seek a deficiency judgment to one year. Foreclosure cases filed after July 1, 2013, are being processed through the state Court more quickly than before.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is available only to individuals with regular income. It requires that the debtor file a plan providing for payment to creditors over a period of up to five years. The benefits of a Chapter 13 include the ability to reinstate a home mortgage that is in default, stop IRS collection efforts while payments are made, the ability to retain non-exempt real estate and personal assets, and a broader form of discharge.
Chapter 13 may be a good choice for individuals with home mortgage problems. It allows significant time to reinstate a mortgage in default. It may allow individuals to retain investment properties and other assets that might be lost in a Chapter 7. It may be the only choice for those with too much income to qualify for a Chapter 7. Call us if you would like to discuss whether a Chapter 13 is right for you.
Dischargeability of Second Mortgages in Chapter 13
Most individuals are unaware that they may be able to discharge second and third mortgages in Chapter 13. If your home appraises for an amount less than your first mortgage balance you may be able to strip off all inferior mortgages in a Chapter 13. The second (and possibly third and forth) mortgage is considered unsecured and treated like a credit card. The lender is paid pro rata along with the other unsecured creditors and at the end of the plan the mortgage is stripped off the property. Call us to see if you qualify. We do not charge for an initial consultation.
This article is not intended as a substitute for competent legal or accounting representation, but merely as a guide to help you decide whether you need the services of a licensed attorney or CPA.