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Foreclosure
Filing a bankruptcy will stop a pending foreclosure sale on your property. This is due to the Automatic Stay. The filing of a bankruptcy invokes the Automatic Stay, which prevents creditors from foreclosing on the property without the courts permission. Once a bankruptcy is filed, the creditor has to file a Motion for Relief from the Automatic Stay to a bankruptcy judge.

Short-sale
A short-sale takes place when the lender on your property is willing to accept less than what is owed against it in a sale. There are certain requirements that need to be satisfied in order to qualify for a short-sale.

Chapter 13
When a client has fallen behind on their mortgage payments and wants to save their house, a Chapter 13 bankruptcy may be an option. In order to qualify for a Chapter 13 bankruptcy, the client must show that they earn sufficient income to pay their necessary living expenses and have a sufficient amount of disposable income. The disposable income would then be used to re-organize the arrearage amount and allow the person to get caught up. Generally, a person in a Chapter 13 bankruptcy would be in a payment plan for at least three years and no more than five years. In certain circumstances, a completely unsecured second deed of trust on a property may be discharged in a Chapter 13 bankruptcy. This takes place when the fair market value of the home is worth less than or equal to the first deed of trust. This in essence leaves the second deed of trust completely unsecured and will be treated as an unsecured debt in a Chapter 13 payment plan.

Loan Modification
In order for a lender to avoid a foreclosure, lenders are willing to modify loans. However, not all lenders are willing to modify their loans. Furthermore, not all people will qualify for a loan modification.

Deed in Lieu of Foreclosure
In order to avoid the costs associated with the foreclosure process, some lenders are willing to have the borrower sign a Deed in Lieu of Foreclosure. However, there may be a tax liability involved with signing a Deed in Lieu of Foreclosure if the lender decides to write it off in their books as a forgiveness of debt. Filing a bankruptcy and hiring and experienced accountant/CPA should resolve a forgiveness of debt issue.

Options
In order to determine all potential options for your house, contact us today at (818) 403-LAWS (5297) for your free consultation with a bankruptcy attorney.