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Bankruptcy & Foreclosure

Certain creditors may have special rights (see creditor rights) when faced with collecting bad debts. One of these rights is the availability of a procedure called foreclosure. Foreclosure is most often exercised in relation to unpaid mortgages on real property. In a foreclosure proceeding, the creditor exercises its option under the mortgage to force a sale on the property that is the subject of the mortgage in order to use the proceeds to pay the debt.
The rights of a mortgage (usually the lender; commonly a bank or mortgage company) when the mortgagor (borrower or home-buyer) defaults vary considerable from state to state. There are, however, a number of similarities. Generally, there are only two types of foreclosure sales: a judicial sale and a sale pursuant to a power of sale clause contained in the mortgage documents. Judicial sales are more common. Although the details of judicial sales are mainly a matter of local law, they usually require notice of a hearing, a hearing, a judicial determination of default, notice of sale, a sale, confirmation of a sale, possible redemption, and entry of a judgment for any deficiency (the difference between the sale amount and what is owed on the debt).

In order for a mortgagor to avoid a judicial foreclosure once he or she has defaulted in making scheduled payments, the entire debt must be paid. In about half of the states, the period in which the mortgage can exercise this option, or redeem the debt, extends even beyond actual foreclosure. In that case, the redemption amount is the sale price plus interest, not the amount of the debt secured by the mortgage.

Foreclosure & Maryland Law

In a judicial foreclosure, the sale is not enforceable by the buyer until it has been confirmed by the court. Legal rules limit the court's discretion on whether to confirm the sale. Mere inadequacy of price without more is not enough to justify the court's refusal to confirm a foreclosure sale, but adequacy of price is a primary concern. In many states, the property must be appraised before the foreclosure sale, and the sale will not be confirmed unless the sale price is at least a certain percentage of the appraised value.

Because judicial foreclosures are time consuming and procedurally complicated, some mortgages include in their standard mortgages a power-of-sale provision permitting a sale without any judicial intervention if the mortgagor defaults. This approach has only limited recognition in the United States. In the states that do allow it, the sale must be public and preceded by a notice (usually by advertisement) that specifies the amount due, the property description, the date and location of the sale, and whatever other matters the statute and the mortgage specify. Because courts tend to be critical of non-judicial sales, they are quick to grant relief against such sales for even slight irregularities. This reluctance to accept non-judicial sales can result in uncertainty of title, which could be the main reason that power-of-sale foreclosures have failed to gain greater acceptance.

Due to the important rights involved, debtors facing the prospect of foreclosure and loss of their homes can benefit from the advice of counsel experienced in this area. Attorneys working in this area can also assist borrowers proactively by reviewing the mortgage documents before the borrowers sign them, in order to protect the borrowers' rights and eliminate provisions that do not serve the borrowers' best interests, such as power-of-sale clauses. On the other hand, lawyers representing creditors can guide them through the sometimes cumbersome foreclosure process and aid them in the recovery of the money that they are rightfully owed.

What can be done to stop Foreclosure?

When you file for Bankruptcy the following happens:

All creditors must immediately stop contacting you until they are allowed to do so again by the court system. Typically this is two or three months.

Lets take a look at scenario to see how this can help you.

You are unable to make your house payments

If you delay at this stage and allow foreclosure to happen you may loose your home. However filing Bankruptcy will immediately freeze the foreclosure process.

Once you file Bankruptcy - Foreclosure process is frozen

Ok now what? Foreclosure has been delayed but how does that really help you long term? Now you have more time you can sell your house through a real estate agent. Selling your home through an real estate agency will give you a much higher value then a foreclosure auction. This major step can help you sell your home - pay off your bills and get back on your feet.

Learn more - Contact our Maryland Bankruptcy Lawyers today!

 

 

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