Can Bankruptcy Protect Me from Foreclosure?
Yes. Filing for either form of consumer bankruptcy will initiate a court-ordered “automatic stay,” freezing any ongoing collections actions, which includes foreclosure. This will halt any foreclosure lawsuit in progress or prevent your financial institution from initiating one.
This does not eliminate your mortgage obligations, however. In Chapter 7 bankruptcy, your home may be subject to the liquidation process, where nonexempt assets are sold (or “liquidated”) to create funds to repay creditors. The state of Florida has one of the most generous homestead exemptions in the country, making it fairly easy to protect your home from liquidation.
In Chapter 13 bankruptcy, your debts are reorganized in a single, court-approved repayment plan. This will include your mortgage obligations. You will continue with this payment plan for a period of 3 to 5 years, and your financial institution will not be able to pursue foreclosure against you so long as you continue to make your payments. In many cases, you can negotiate with your bank at the conclusion of the repayment plan; in others, you will still need to repay the remaining balance, as mortgage loans are not an “unsecured debt” that you can discharge at the conclusion of bankruptcy. Our bankruptcy attorneys at Cremeens Law Group PLLC can help decide if bankruptcy makes sense for your overall financial situation or as a means of halting foreclosure.
I Want to Contact or Negotiate with my Creditor. How Do I Know Who to Contact?
Contact information, including a mailing address and phone number, should be available on your mortgage statement, either online or on a physical paper copy. Note that there is a difference between a “lender,” who qualifies you for the mortgage when you initially close, and a “servicer,” who collects your monthly payments. You will want to contact the servicer to negotiate your mortgage agreement, ideally via your legal representation, whether you are seeking a loan modification, deed in lieu of foreclosure, cash for keys, a short sale, or any other potential compromise to avoid foreclosure.
Can I Buy My Home Outright After Foreclosure Has Begun?
Yes, in most circumstances. “Right of redemption,” or the act of paying off a property’s debt and “redeeming” the property from foreclosure, is available in all states before a foreclosure sale is conducted. This means if you are able to gather sufficient funds, you can stop a foreclosure sale before it happens by purchasing the property outright, covering the principle balance and other fees.
In Florida, there are also circumstances in which you can redeem a property after a foreclosure sale. You can acquire the property from the individual or business entity that bought the home at the purchase price; in some cases, you will still need to pay the entirety of the mortgage debt, plus fees. You only have a narrow window to redeem after a sale, however, as the transaction must occur before a clerk files the certificate of sale. Sometimes, a foreclosure judgment will include a specific time limit on when redemptions can occur.
How Does the Florida COVID-19 Foreclosure Moratorium Impact Me?
On March 13, 2020, a grand majority of the state of Florida’s courts shut down in-person operations as a means to fight the spread of the evolving COVID-19 pandemic. All nonessential court activity, including hearings for foreclosures and evictions, was effectively suspended. Florida Governor DeSantis soon issued an Executive Order, Mortgage Foreclosure and Eviction Relief, which, as its title would imply, placed a moratorium on the initiation or continuation of all foreclosure and eviction proceedings. No matter the circumstances, foreclosures and evictions could not be undertaken or completed. As COVID-19 continued to spread, Governor DeSantis signed several extensions to this moratorium, and the relevant courts remained closed.
As of August 1, 2020, a statewide foreclosure and eviction moratorium is still in place. However, it is no longer a blanket ban, and you must now meet eligibility requirements to qualify. New language requires borrowers to repay mortgage or rental debts once they are “no longer adversely affected by the COVID-19 emergency.” In other words, you must have experienced a loss of significant reduction of income as a result of COVID-19, whether that be through a lost job or hours due to state-mandated business shutdowns or significant time away from work as a result of fighting the illness. Additionally, mortgage protections are now limited to single-family homes. This revised moratorium is scheduled to expire on September 1, 2020, and it is unclear if Governor DeSantis will extend or continue to modify its terms.
Do I Need an Attorney to Assist with My Foreclosure Situation?
While it is possible to defend against foreclosure without the assistance of legal representation, the reality is the court and regulatory systems involved make the process challenging to navigate, especially when the stakes and pressure are so high. Experienced foreclosure defense attorneys, like the ones who make up our team at Cremeens Law Group PLLC, can give you the relief you need. We have a full understanding of Florida’s foreclosure laws and are responsive to new changes introduced as a result of the COVID-19 pandemic. You should not have to fight to save your home alone, and with our legal services on your side, you will not have to.