The most important element of the legal process known as foreclosure is time. Homeowners never seem to have enough of it to recover fully from their financial hardship, to work out a solution with their lender, or move out of the house before eviction. However, there are a number of ways to put the process on hold even just for a few extra weeks.
Even for families who have no desire or ability to stop foreclosure and keep making payments on a house, it may be helpful for them to live in the property for free for as long as they can. This gives them time to put together a savings plan, pay down other debts, or just begin to recover from the hardship that pushed them into foreclosure. And for homeowners who do want to save their homes, the longer they can try to find a way out, the more likely they will be to succeed.
Probably the most important tactic will be to contest the lender’s foreclosure lawsuit at every turn, either through the use of an attorney or by diligently reading and understanding the rules to make motions in court. Banks are often given a free pass by homeowners to steal houses because the lawsuit is not challenged. The mortgage company gets a default judgment and the property is fast-tracked to sheriff sale, while the eviction date approaches ever closer.
The best way to make sure homeowners have more time is simply to answer, contest, or object to every paper that the bank files in court. With thousands of rules and laws and regulations at every level from local to state to federal, it is almost guaranteed the lender did something wrong. The trick is for homeowners to learn how they can identify these rules violations or contest the foreclosure based on other legal concepts, and make the best defense they can.
Of course, it is also vital for the borrowers to make sure that they are following the court rules as closely as possible. Many courts allow between 15-20 days for an answer to be filed after the date of service. The sooner homeowners file their answer, though, the sooner the bank will file its own answer again; thus, for homeowners looking for more time, it may be beneficial to file the paperwork on the 14th or 19th day (depending on when it is due). The lender also needs to be served with any motions filed in court, and sending the paperwork certified or registered mail will take up another few days.
With the length of time a typical lawsuit can take, and the complexity in a contract law case involving foreclosure, this simple tactic can give homeowners 1-2 years of extra time to remain in their home without making a mortgage payment. Two of the more creative methods of defending against a foreclosure that have come up recently is contesting who owns the original loan, and requesting the entire loan be rescinded due to violations of the Truth in Lending (TIL) regulations. Of course, these may not be successful in every case of mortgage foreclosure, but getting more time to work on a long-term solution is the main goal.
But combined with a contingency plan for bankruptcy, homeowners can take even more time to plan for their financial futures and eliminate one of the last remaining headaches — their other debt. Declaring bankruptcy even just a few days or hours before a sheriff sale has the effect of immediately stopping the auction and putting the foreclosure process on hold while the issue is tied up in bankruptcy court. This can give borrowers another few months to stay in their home mortgage free and save up money.
Also, if the homeowners are in foreclosure because of a financial hardship, and have loads of other credit lines that are in default, it may make sense for them to discharge these debts and get a fresh start with Chapter 7 bankruptcy. Once the mortgage is finally dealt with and the owners have to move out (hopefully years after the initial missed payment), there may be little logical reason to keep paying other unsecured debts like credit cards or personal loans with skyrocketing interest rates and huge junk fees.
A few thousand dollars in credit card debt can quickly balloon to tens of thousands of dollars once interest rates go up to 29%, and homeowners just getting over a foreclosure may not want to deal with this past headache. As well, with two years of late mortgage payments and a foreclosure, their credit can not get any worse so it may be the perfect time for bankruptcy. Hopefully with two years of savings, homeowners will not feel compelled to borrow money at 19% interest ever again. Bankruptcy can give such families the one way ticket they need out of the debt trap.
Homeowners are facing foreclosure in record numbers due to the predatory lending, financing, and investing activities of the largest banks in the world. Much of the coming depression was engineered, either inadvertently or purposely, and it is up to the borrowers to defend themselves against the economic devastation anyway they can. It is a mistake for homeowners to give these lenders a free pass, allow them to foreclose with no objections, move out of a house too soon, and put the financial health of the banks ahead of their families’ futures by continuing to make impossible payments on debt that was never designed to be paid back.