Tactics to Avoid Foreclosure - Facing Your Catastrophic Bankruptcy

Tactics to avoid foreclosure are used by homeowners who are having problems with their mortgage payments. They employ these tactics to prevent foreclosures of their homes. There are many different tactics that homeowners can use to fight back against their lenders. These tactics include: non-judicial forbearance, bankruptcy, short sales, and sale in lieu of foreclosure. The following is more information on each of these tactics.

Nonjudicial Backdoor Bargain. When a homeowner is having difficulty making their mortgage payments, they can sometimes seek an "involuntary liquidation of the premises." This may be done through a refinance arrangement, but it can also come about through "otherwise" means, such as through a court order to stop foreclosure. If a plaintiff's request for an "involuntary liquidation" is approved, the plaintiff is then allowed to negotiate directly with their lenders regarding their problems and obtain "non-judicial" discharge from the original lawsuit.

Bankruptcy Tactic. Many homeowners do not want to go through the stress and hassle of losing their homes to foreclosure. For them, there is the option to file for bankruptcy. However, homeowners should be aware of how this tactic can affect the future of their homes and their credit ratings.

Under the United States District Judge, "filing bankruptcy" is a phrase that is used very loosely. In some states, this action can bar plaintiffs from collecting any damages whatsoever. In other states, courts have the discretion to uphold or Overturn the bankruptcy ruling. For instance, if the United States District Judge rules that the mortgage deed cannot be assigned to the homeowners, the foreclosure process can continue. On the other hand, if the United States District Judge rules that the foreclosure must take place, then plaintiffs are automatically entitled to relief. But, in order to receive relief, plaintiffs must pursue an "intersvent" of the foreclosure law.

Interventing the foreclosure law means that plaintiffs will argue that they were not given notice that they had a right to bring the complaint. To set this process in motion, plaintiffs must prove to the court by clear and apparent evidence that they were not notified of their right to bring a complaint. The easiest way for plaintiffs to set up a proof of notice process is to attach documents to their complaint that includes the date that they were told they had a right to bring a complaint. In addition, the complaint must include new facts that demonstrate plaintiffs' right to bring the suit. For instance, if a homeowner's initial mortgage contract provides that he or she is required to pay additional taxes after the first year of owning the home, then the original mortgage contract must be attached to show that the homeowners actually owe these additional taxes.

Another tactic to avoid foreclosure is to request an automatic stay. The most common use for an automatic stay is to prevent a sale of the property while the case is being processed. The court automatically halts the sale unless it is able to determine that the mortgagor is in default of the mortgage deed of the property. An automatic stay can easily be placed on a sale until all legal remedies have been fully exercised. For most borrowers, an automatic stay would prevent the bank from selling the house at any price until the case has been resolved.

Bankruptcy is another option available to borrowers who wish to avoid foreclosure. Unfortunately, homeowners cannot prevent foreclosure with bankruptcy because the bank simply declares the homeowner a bankrupt and proceeds with the foreclosure process against the homeowner. Bankruptcy does not stop the foreclosure process until the case has been successfully completed. Bankruptcy does not give the borrowers a fresh financial slate; instead, it transfers all of the borrowers' financial obligations (mortgage debt, tax debts, etc.)

The best way for borrowers to avoid foreclosure is to take action early. They should first seek advice from a foreclosure defense attorney who can provide them with strategies on how to proceed with their mortgage foreclosures. If a borrower files for bankruptcy, the court will stop the lenders from taking any action to collect the balance of the mortgage. This is a big setback for borrowers because once they declare themselves bankrupt, they lose all of their assets and are unable to pay back their debts. For this reason, it is always advisable for borrowers to consult with a bankruptcy lawyer before they undertake any action to try to keep their homes.