Bankruptcy and Foreclosure

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Bankruptcy
and
Foreclosure
Understanding The Basics
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The American Dream Threatened
Owning a home is still the American dream
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Foreclosure can threaten that dream
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In recent years there has been a significant
increase in foreclosures because of the financial
crisis faced by the nation
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Bankruptcy may be a solution if you have been
served with a notice of foreclosure however,
bankruptcy isnt always the best solution
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Defaulting on Your Loan
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When you take out a mortgage loan your home
secures the debt
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If you default the lender can foreclose
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Legally, a payment that is even a day late can
qualify as default
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Most lenders dont proceed with foreclosure until
a borrower has missed 3 or more payments
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Ohio Foreclosure Process
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Bankruptcy Halts Foreclosure Process
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When a debtor files a petition for bankruptcy
the court immediately orders an automatic stay
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Chapter 7 Exemptions
Chapter 7 bankruptcy is referred to as a
liquidation because the debtors non-exempt
assets are sold to repay creditors
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Ohios exemptions, however, are very liberal
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States may choose to let debtors use federal or
state exemptions, or both
Ohio lets debtor choose federal or state
Ohios state homestead exemption is 132,900
Exemption only protects property from sale by
trustee as part of bankruptcy does not protect
home from sale by foreclosure
At termination of bankruptcy almost all debts are
discharged, or forgiven
Can relive debtor from other debts and free up
money to catch up with mortgage
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Chapter 13 Bankruptcy
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Known as a wage-earner bankruptcy
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Debtor must develop a plan to repay creditors
over time
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Even non-exempt assets can be saved in a
Chapter 13 bankruptcy
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Resolving the Debt
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Whether a debtor files a chapter 7 or chapter 13
bankruptcy, the debt owed to the lender must
ultimately be resolved to permanently halt the
foreclosure
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Second Mortgage
Bankruptcy may also be able to relieve a debtor
of a second mortgage
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Deficiency Judgments
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Many borrowers do not realize they could still
owe money after a foreclosure and subsequent
sheriffs sale
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If the home sells for less than what you owe, you
could end up with a deficiency judgment for the
difference between what you owed and what the
home sells for at the sheriffs sale
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The deficiency judgment could be discharged in
bankruptcy
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Want to Know More about Bankruptcy and
Foreclosure In Ohio?
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Click to visit thecolumbusbankruptcylawyer.com
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Content provided by Best Legal Practices