Avoiding Foreclosure in Albuquerque
This information is provided for educational and informational purposes only. New Mexico Financial & Family Law, P.C. does not enter into State Court foreclosure proceedings. However, often bankruptcy can be an alternative way to resolve foreclosure.
If you are concerned about a bank foreclosing upon your Albuquerque home, know that you may have financial options to stop it from happening. But you must be prepared to act fast!
Banks and lenders will quickly enter the process of foreclosure and resale once you are officially delinquent on your payments past the designated period. Once the foreclosure proceedings have officially begun, the property has officially left your hands. The bank cannot halt the repossession and resale of a home once certain types of paperwork have been filed.
The good news is that you may be able to alleviate your financial situation and halt foreclosure at the same time by filing for bankruptcy. Filing for Chapter 7 bankruptcy in Albuquerque allows you to receive a temporary stay on collections actions, which includes certain types of repossessions. Chapter 13 bankruptcy can allow you to delay foreclosure and then arrange a payment plan to catch up on mortgage payments over the next 3 – 5 years.
New Mexico Financial & Family law does not enter into State Court foreclosure cases, but we can assist you with a bankruptcy filing, workout agreements, and other financial means to get you back on solid footing. Schedule a no-obligation case review when you call (505) 503-1637 or contact us online today!
Why Talk to an Albuquerque Bankruptcy Attorney When Facing Foreclosure?
Your first step when facing a financial crisis involving your home is to analyze your mortgage and all the legal factors tied to it. These issues can be complex, so it may be best to review your situation with a financial law attorney familiar with the process for foreclosures in Albuquerque.
Once you understand your situation, you can begin exploring your financial options.
A foreclosure lawyer in Albuquerque can advise whether your best option may be a workout agreement, refinancing, bankruptcy, or giving up the home. There can be a lot of tense, personal feelings wrapped up in the idea of being foreclosed upon, so it’s important to talk to someone with an objective understanding of the law. Working with an attorney can allow you to act fast, and you can determine an overall strategy for managing and reducing your debt for a long time.
You may be able to save your home, but you must act quickly. New Mexico Financial & Family Law is available for consultation regarding bankruptcy, foreclosure prevention, and other financial matters. Our Albuquerque-based firm collaborates with a professional network of CPAs, credit counselors, and others who can work with you to help determine your best options.
Is Foreclosure My Only Option?
Home lenders will not hesitate to enter foreclosure proceedings once a borrower has missed enough payments to be considered in delinquency. Many lenders are so strict that they will initiate proceedings for a foreclosure within just three to six months of the first payment missed, regardless of whether the borrower resumes making timely payments.
Not all lenders are this harsh. In a typical situation, once three or more payments have been missed, the lender will issue a demand letter to the borrower requesting that they make immediate payment for all arrears (and, in many cases, penalties) within the next 30 days.
Panic in this situation is common, but know that whether or not your lender has started foreclosure yet, they are simply trying to coerce you into getting caught up. While past experience tells them that many buyers who are behind more than three months are highly likely to default, they also know that there’s no motivator quite like risking losing the home!
Foreclosure proceedings move fast, so be sure to reach out to your lender to discuss your options for delaying foreclosure and forming an agreement to catch up. Speaking to an experienced attorney in Albuquerque can allow you to review your finances thoroughly and form an agreement to repay the lender. Once lenders see demonstrable proof of an ability to pay, they may halt or cancel the foreclosure.
However, know that once a foreclosure sale has begun, the lender cannot stop it. Many lenders will also state that they are unable to halt their foreclosure process even before a sale. The good news is that, if there is no sale, then bankruptcy can be one option to halt foreclosure.
Bankruptcy Grants an Automatic Stay, Sometimes Stopping Foreclosure
Bankruptcy is one of the only processes that can force a lender to halt collection actions. This protection may extend to foreclosure proceedings and collections actions related to seeking past-due mortgage payments.
A petitioner filing Chapter 7 or Chapter 13 bankruptcy can have their automatic stay granted once their initial petition has been accepted. This stay remains in effect until your case is closed, meaning you have successfully completed bankruptcy or your case has been dismissed early.
Note that someone who has significant equity in their home (i.e. they have been making payments for several years) may not qualify for the needed Chapter 7 bankruptcy exemptions, meaning they may be forced to liquidate their home to complete the Chapter 7 bankruptcy process.
A Chapter 13 case, however, does not require liquidation. Further, someone who earns enough to make regular mortgage payments may not qualify for Chapter 7 based on the means test. A Chapter 13 bankruptcy case grants an automatic stay and allows the borrower to assess the total volume of the debt and come up with a reasonable payment plan to get caught up on their debts.
This protection is not available in all cases, however. Further, it may not be in the best interests of many individuals facing bankruptcy to keep a home they cannot afford to make payments on. Speaking about your situation with a bankruptcy and debt relief lawyer in Albuquerque can allow you to examine your options and choose the most appropriate one for the good of your financial future.
Options for Foreclosure Relief in Albuquerque
Know that the only path to keeping your home once you have become delinquent on mortgage payments is to catch up on payments in a timely manner. However, many homeowners need help to clear the gap and get back on sound footing with their lender. Here are some options available under Federal and New Mexico State programs:
Obtain Housing Relief Assistance From the New Mexico Home Fund
The State of New Mexico was granted federal and state funding for the purposes of helping home renters and owners stay in their homes. Eligible households can apply to receive assistance for utility payments, home loan payments, rent, and other essentials. Any funds granted are not a loan and do not need to be repaid.
This option can provide temporary assistance and some funds to help close the gap. However, if homeowners are severely behind on mortgage payments, they will need to explore other options for relief.
Workout Agreements With the Mortgage Lender
A “workout” is a formal term for brokering a deal with your lender in order to avoid negative outcomes, including foreclosure. Many lenders are willing to arrange a payment plan or temporary relief from foreclosure, provided that the mortgage holder can demonstrate their ability to repay.
Coming to a workout agreement can be difficult, as many lenders act as if their loan policies are inflexible. They may also be reluctant to come to a deal with a borrower who has failed to make timely payments on a consistent basis. Worst of all, even when put in writing, these workout agreements can be dissolved without any notice by the lender, especially if the loan is transferred to a debt collection agency or another lender.
While a workout agreement is a straightforward method of getting back to good terms with a lender, it also lacks the protections afforded by legal options such as bankruptcy.
Chapter 13 or Chapter 7 Bankruptcy
Chapter 13 bankruptcy can be a good option for borrowers who are behind on payments for multiple types of debts and do not want to lose their homes. Filing for Chapter 13 is the only way to grant the borrower federally backed legal protections against collection actions (provided foreclosure hasn’t begun) and a pause on payments.
Note that Chapter 13 payment plans typically focus on unsecured debt rather than home loans or other forms of collateral-backed financing. However, Chapter 13 filings can include home loan payments, in some cases, allowing the homeowner to pay back outstanding debts according to a payment plan.
Chapter 7 bankruptcy is a less common means to prevent foreclosure, as homeowners with equity in their home have only a set limit to their exemptions, meaning they could lose their home if it has been paid off in large part. Chapter 7 petitioners must also pass a means test, and if they earn a regular income, they may be required to file Chapter 13 instead.
Speak with a bankruptcy lawyer to examine your finances and determine which path forward may be best for you.
Speak to Financial Attorneys Who Can Help
Whether or not you decide to keep your home, it’s important to look toward your financial future in the long-term. In many cases, bankruptcy is the most favorable alternative to having significant debt and collections actions following you wherever you go.
Talk to the person who can help you make the right decision for yourself, your family, and your ultimate prosperity. Call (505) 503-1637 or contact us online to speak to a lawyer who can help you examine every aspect of your finances, assess your options, and make the best choice for the life you want to lead.