You have just been served with a foreclosure summons and complaint, which tells you that you have 35 days to answer or else a default judgment will be entered against you. You understand that you may lose your home. What should you do?
The first step is to seek competent counsel, who may give you the following options:
- Evaluate your relationship with your mortgage lender to see whether or not there is a basis for filing a contesting Answer to the complaint. Typically, filing a contesting Answer will buy you time but it will not dispose of the mortgage. But it may cause your lender to come to the table and negotiate a loan modification. Foreclosure mediation is available in all foreclosure actions.
- File a non-contesting Answer, which will keep you informed as to the status and progress of the foreclosure, and give you access to foreclosure mediation.
- File no Answer but request foreclosure mediation. This is not a strong option.
- Seek the lender’s agreement to accept a deed in lieu of foreclosure, making sure that you obtain a release of the mortgage debt.
- File a Chapter 7 bankruptcy petition. This will only slow the foreclosure process for a short time, but will allow you to discharge the mortgage debt. This is a good alternative if you intend to walk away from the property.
- File a Chapter 13 plan and petition. If approved by the court, this will allow you to stop the foreclosure, keep your home and pay your mortgage arrears over a period of 36 to 60 months, through the bankruptcy trustee. You must resume your regular mortgage payment, and make timely monthly payments to your lender and the trustee in order to avoid having your case dismissed. It may also be possible to strip off a second mortgage.
What option is right for you, depending upon the facts and circumstances of your situation, and whether you want to keep the house or not, and whether you are able to make the payments. Give us a call today to explore your options.