We’ve written a series of blog posts answering common questions regarding bankruptcy and property foreclosure. Call (262) 827-0375

Foreclosure For Sale - bankruptcy ahead?

Bankruptcy: Should You Consider Filing When You Face Foreclosure?

When a lender decides to foreclose on your property, where do you turn? Filing for bankruptcy may not seem like the obvious answer, but it might be a viable solution in some cases. Here’s how these concepts all add up under Wisconsin law.

Foreclosure Fundamentals

Foreclosure is when you are behind in mortgage payments and a bank, loan servicer or other lending institution decides it’s going to seize your property. Thanks to the lending contract you signed, they have the right to grab your home, office or other asset and sell it for the cash.

Of course, there are some limits to this power. Banks usually only foreclose when you’ve missed three (3) payments or more. If it looks like you’re not going to pay, then the lender will want to cut its losses.

Bankruptcy As a Self-defense Mechanism

The glaring problem with foreclosure actions is that they don’t always leave consumers with room for error. Lenders can be quite aggressive about recovering their losses and fail to consider the human impacts.

Bankruptcy is an effective last line of defense because it instantly implements an automatic stay. This puts a halt to creditor actions such as

What Happens Next?

After a bankruptcy filing, the automatic stay will remain active until the case wraps up in a few months. Life doesn’t always play out so perfectly, however. If a lender files a motion to lift, or cancel, the automatic stay, then your breather might be cut short.

Are creditors trying to make things tougher? The lender just wants to get its money back because you are behind in mortgage payments. Reducing the length of the stay makes it possible to sell your property earlier.

Upholding the Automatic Stay

Fortunately, you can fight back. When lenders try to get stays canceled, they typically make the argument that they’re losing money. You might counter by

  • Showing that a mortgage’s equity, or property value minus lien balance, is high enough to cover the lender’s losses, or
  • Providing the lender with court-approved adequate protection, such as interest-only cash payments, during the case.

Making a Smart Choice

When lenders foreclose, families can lose their homes and the lifestyles they’re used to. Professionals might have to give up the vehicles that are critical to their careers.

Foreclosure cases can be tricky to predict. Bankruptcy may let consumers divert bad situations toward better outcomes. It doesn’t stop the foreclosure forever, but if you’re behind in mortgage payments, putting things on hold could help you get back to a state of financial balance.

Want to learn more about how bankruptcy types like Chapter 7 and Chapter 13 might help you push back and even stop foreclosure until you regain your footing? Talk to bankruptcy attorney Michael Burr at the Burr Law Office.

Photo by Jeff Turner from Flickr using Creative Commons license.

What is Foreclosure Fraud?

Did you know that some banks have foreclosed on homes using forged documents? As this video reveals, some banks attempt to take consumers’ homes illegally in a phenomenon known as foreclosure fraud. Click below to watch the story and learn how to spot clues that may save you from losing your property.

According to one victim, his servicer told him not to pay his mortgage while they worked out a loan modification. They then notified him that they have lost his modification application—six times. Days away from losing his home, this consumer discovered that his bank was using phony documents to push him out of his home.

Foreclosure fraud is a criminal act, and companies must be held accountable for these false documents. An experienced attorney can help you avoid these types of situations and get you the help you need. Attorney Michael Burr takes care of each case from start to finish, ensuring his clients are properly attended to.

If your bank has threatened to illegally take your home, call Milwaukee bankruptcy attorney Michael Burr of Burr Law Office at (877) 891-1638. He will stand up for your legal rights against big lenders.

Bankruptcy Consequences: Skipping Payments

Many people avoid filing despite increasing debt because they are afraid of how the process will affect their credit score and ability to rebuild their finances. However, not filing for bankruptcy with a lawyer when you no longer have the ability to pay your debts can have dire bankruptcy consequences.

Wage Garnishment

One of the first steps your creditors will take when you neglect to pay your debts is to garnish your wages. The maximum amount that can be garnished from you paycheck is usually 25 percent of your disposable income if it is greater than 290 dollars, or any amount greater than 30 times the federal minimum wage. While tips are generally not garnished, your wages, salaries, commissions, bonuses, and pensions can all be garnished until your debt is paid.

Liens and Levies

A lien refers to the legal claim over your property by the government or a specific creditor. A levy, on the other hand, refers to the actual seizure of property in order to satisfy a debt.  Individuals who fail to pay their debts without filing for bankruptcy may face one or both of these penalties. In the event that a levy is put in place, your creditor has the right to repossess and sell property that you own, such as your car or home—as well as property that is yours but held by another party, such as your bank accounts, retirement accounts, dividends, and even the cash value of your life insurance policy.

Foreclosure

Individuals who fail to pay their mortgage for a prolonged period of time may face foreclosure, a process in which the rights to your property are taken away and the property is sold in order to satisfy unpaid debts and liens.

Don’t let outstanding debts increase your risk of repossession, foreclosure, or other bankruptcy consequences . Get the legal representation you need by contacting the Burr Law Office at (262) 827-0375. You can also set up an FREE initial consultation by visiting us online.

When Do I Need to Begin Worrying About Property Repossession?

If you’re experiencing financial difficulties, you may have stopped making payments on secured debts like cars or electronics. The consequence of this action is commonly called repossession. Because you have defaulted on the loan, you are no longer entitled to keep your car, home, or other item. Repossession of a home is usually called foreclosure, and it works differently than repossession of cars or electronics.

Understanding Repossession

As soon as you miss a payment, your lender can repossess your car or other possession. However, many lenders wait until you have missed two or three payments before repossessing your item simply because the process is expensive and time-consuming. You will receive one or more notices of missed payments, notifying you that you are in danger of repossession. At this point, you usually have the option of making up missed payments and keeping your property. If you fail to do so, you can expect repossession.

After Repossession

Your property will be sold at an auction. You will be notified of the date and time of this sale, so you can attend and buy back your property, if you choose. To do this, you must pay the balance of the loan and the costs of repossession. If the property sells for less than its fair market value, the lender may pursue a deficiency judgment and force you to pay the difference between the sale price and the fair market value. Though this is possible, it doesn’t usually happen.

If you’ve missed payments on a car, electronic equipment, or other valuable item, you could be in danger of repossession. In some situations, declaring bankruptcy may be a good strategy for stopping the process. To learn more, call (262) 827-0375 to schedule a consultation with a Milwaukee bankruptcy attorney at Burr Law Office.