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If you’ve ever fallen behind on your house payments and faced the frightening possibility of losing your home to foreclosure, you may not have been aware that bankruptcy could solve your problem. A Florida bankruptcy lawyer, who practices in the Florida bankruptcy courts, can guide you through that process.

The Basics of Foreclosure

There are two kinds of foreclosure, judicial and non-judicial. In Florida, the majority of foreclosures are judicial. That means that for the bank to complete the foreclosure there will have to be a hearing in court. Before 2010, the law favored banks. Now, the law favors borrowers. 

In Florida, all mortgage holders sign a promissory note when purchasing a home. That gives the homeowner extra protection. The foreclosure process in Florida is as follows:

  • A foreclosure begins with the bank or mortgage holder sending the homeowner a breach letter and giving them 120 days to get current on payments
  • The homeowner can apply for loss mitigation
  • The homeowner gets the notice of foreclosure
  • The homeowner gets more time to resume payments and stop the foreclosure
  • The homeowner can file for bankruptcy

Members of the military on active duty get even more time to stop the foreclosure process.

Understanding Bankruptcy and Foreclosure

When a homeowner misses a mortgage payment, the process of foreclosure may begin. In a foreclosure, the bank takes back possession of a home. The home may eventually be sold by the bank to satisfy the outstanding debt. A foreclosure has a very negative effect on your credit score and should be avoided if possible. 

If money is tight and you cannot pay your bills, there are few options. Bankruptcy may be the best solution. Bankruptcy is a legal process that halts collection activities by creditors, stopping harassing calls, emails, and letters. In most bankruptcies, debtors can make a payment plan and pay off creditors over time. Most importantly, for homeowners, if you fall behind in paying your mortgage, filing for bankruptcy gives you time to correct the situation because an “automatic stay” will be issued by the court.

Different Bankruptcy Options

There are two different kinds of bankruptcy:

  • Chapter 7 bankruptcy halts the foreclosure for several months, but the bank can file a motion to lift the automatic stay and proceed with the bankruptcy.
  • Chapter 13 bankruptcy offers a much better chance for you to keep your home. The payment plan that allows you to bring payments current over time means you can usually stay in your home.

If you choose to file for bankruptcy after the bank has filed to foreclose on your home it won’t help your situation. It just makes the foreclosure inevitable.In conclusion, although it may seem like a drastic step, bankruptcy can be a lifesaver, allowing you to stay in your home. The best way to understand your options is to consult an experienced bankruptcy attorney. Contact us today, and we can evaluate your situation.