Receiving a notice of foreclosure is a scary moment for any homeowner. Once the mortgage company has sent notice that they’re beginning foreclosure proceedings, a homeowner may feel completely helpless. They may wonder, “When is it too late to stop foreclosure?”
A foreclosure happens when a homeowner is behind on their mortgage payment and fails to rectify their balance. Many homeowners experiencing foreclosure already struggle with financial hardship. This often causes them to miss payments on their mortgage and other bills.
However, just because a person receives a foreclosure notice doesn’t mean that it’s too late to stop foreclosure from happening. If you’ve received this notice, the Kentucky foreclosure attorneys at O’Bryan Law Offices are ready to help.
An impending foreclosure can be devastating, especially if a person struggles with other expenses they cannot pay. Once you’ve received the foreclosure notice, contact the experienced attorneys at the O’Bryan Law Offices. We’ll help you learn about the options available that can stop foreclosure on your home. In our latest blog post, we answer the question – “When is it too late to stop foreclosure?”. We will also explain ways to prevent a foreclosure on your home or property.
To schedule a free consultation, call our law firm at 502-339-0222 today. The sooner you meet with one of our foreclosure attorneys, the sooner you can start the process to avoid foreclosure.
Are You Facing Foreclosure of Your Home?
You may face foreclosure if you’ve gotten behind on your mortgage payments. Even if you have not received the official foreclosure notice from your mortgage company, you can still begin taking the proper steps to avoid foreclosure. The Kentucky foreclosure attorneys at the O’Bryan Law Offices will evaluate your financial situation and provide the best option that can help save your home. If you’ve already received a foreclosure notice, it’s still not too late to stop the foreclosure.
What Is Foreclosure?
A foreclosure begins when an individual misses several payments on a loan, like a mortgage. Then, the lender pursues legal action against them to recover the amount owed. When a person buys a home or takes out a mortgage, they make an agreement with their lender or bank. Since the lender pays for the home upfront, the contract holds the person responsible for making monthly payments on time over several years to repay the lender.
Once a person is a month late on their payment, the lender will notify them that their monthly payment has not been received. When the owner is two months late on their payment, the lender will send a more serious notice. This notice is called a demand letter.
The lender will typically reach out and attempt to collect the missed payments multiple times before the foreclosure proceedings begin. The foreclosure process varies in every state. However, the lender usually sends a notice of default once the missed payment has surpassed 90 days.
If you miss your mortgage payments, the lender can pursue legal action to recoup money from the defaulted loan. The mortgage lender will usually put the home up for a foreclosure auction. This way, they can recover some of the money they lost. A mortgage foreclosure usually takes six months, beginning once a missed payment has been overdue for a month.
You’ll receive notices once the Kentucky foreclosure process begins. During that time, you can work on paying the lender for the missed payments. Lenders sometimes work out a mortgage payment plan to avoid foreclosure proceedings to get their money back. Most lenders don’t want to worry about the legal process. However, all lenders are different, so discussing your options with your lender is essential.
If the homeowner does not contact their lender to make up for their missed monthly payments, the lender can move forward with the foreclosure sale.
Property Tax Foreclosure
A tax lien foreclosure, or property tax foreclosure, occurs when a person has unpaid property taxes. Instead of the mortgage company pursuing legal action for missed payments, a property tax foreclosure is handled by a government authority to recover the delinquent taxes. The government can also use a tax deed sale to recover taxes.
A tax lien is not created by a contract, like a mortgage, but by the law. When someone misses payments on their state or federal property taxes, the government can place a lien on their property. Once this happens, the property will be auctioned off.
There are two ways that the state you live in will handle a tax sale, depending on whether they’re a tax lien state or a tax deed state. Both types allow tax delinquency sales, but there are some differences between them. During the sale, investors can bid on the property through a public auction.
In tax deed states the title of the property is up for bid, which will give the investor ownership of the property. In tax lien states, the lien is auctioned off, and the investor will collect on the lien. Eventually, they will put the home up for auction. Kentucky is a tax lien state. A property tax foreclosure is a much longer process than a mortgage one and can occur over several years.
What Is the Foreclosure Timeline in Kentucky?
The foreclosure process in Kentucky begins around 30 days after the first missed payment is past due. This part of the process is known as the pre-foreclosure process. When the missed payment is between 60 to 90 days past due, the lender can begin sending out notices of an impending foreclosure.
After this time, the lender can file an official complaint with the circuit court if they still haven’t received payment. The homeowner will be served a summons giving them 20 days to respond to the complaint. If the homeowner responds to the complaint with proof of financial hardship, they could avoid foreclosure.
If the homeowner doesn’t respond to the complaint and/or fails to show up in court, the judge will issue the judgment moving the foreclosure sale forward. Once the judgment is granted, the commissioner’s office will begin the notice of sale process. After at least two appraisers inspect the property, the notice of sale sign will be posted either on or near the property. The notice of sale will also appear at least three times in the local newspaper during the three weeks leading up to the sale.
The commissioner’s office will hold the foreclosure auction during a public auction. The lender gives the starting bid, and the person with the highest bid will receive the property. Once the property is sold to the new homeowner, the current occupant must move out of the home.
After the homeowner has moved out, the U.S. Department of Housing and Urban Development may still seek judgment against the homeowner, meaning they can still owe the lender for their unpaid mortgage payments.
When Is It Too Late to Stop Mortgage Foreclosures?
A homeowner can work with their mortgage lender from the moment they receive notice they’re behind on payments until the property is auctioned off to try and rectify their missed mortgage payments.
It’s important to meet with a Kentucky foreclosure attorney once you’ve received the notice of foreclosure to understand what options are available to stop the foreclosure process. If you ignore the notice and the lender posts a notice of sale sign on your property, the window of opportunity to stop foreclosure begins to close.
Homeowners can still repay the missed mortgage payments between the notice of sale posting and the public auction date. Once the home has been auctioned off, it is too late to stop foreclosure.
When Is It Too Late to Stop Property Tax Foreclosures?
Since a property tax foreclosure happens over several years, the property owner has more time to make up for the unpaid taxes than they do with missed mortgage payments. The foreclosure process can begin after the property has had delinquent taxes for one year. In Kentucky, once the foreclosure process on the property has started, the property owner can work to rectify unpaid taxes during that one year.
Once the property has been sold in auction, the property owner can still work on paying the unpaid taxes and legal fees if the property was sold for lower than the assessed value. However, if the property was sold for the estimated value or more, it will be too late to stop foreclosure on the property.
How Can I Stop the Foreclosure Process?
Now that we’ve answered the question: “When is it too late to stop foreclosure?” We will discuss the options to stop foreclosure if you cannot pay the total amount of missed payments and legal fees.
At the O’Bryan Law Offices, we always recommend that clients consider filing for bankruptcy in order to avoid foreclosure, but we’ll also explain other ways that you can stop a foreclosure.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy filing will pause any pending foreclosure on your home, but it’s not a permanent solution. Since this form of bankruptcy is known as liquidation bankruptcy, a person’s assets are liquidated or sold to repay debts. Unfortunately, those assets include a person’s home and vehicle. This is a viable option to avoid foreclosure if you’re not planning on remaining in the house and just need some breathing room. When you file for Chapter 7, the automatic stay will take effect, preventing your lender from trying to collect your mortgage debt.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a better option for homeowners that wish to keep their home and just need time to catch up on payments. This form of bankruptcy restructures a person’s debts, like unpaid medical bills, a mortgage, and credit card debt, while keeping your home and vehicle. When you file, the mortgage lender can no longer attempt collections on the debt once the automatic stay takes effect.
A loan modification can offer relief if you’re behind on your mortgage payments. If you cannot qualify for a refinanced loan, this may be an option to get caught up on payments. If the current interest rate is lower than you initially got your loan, your lender may modify your loan to reflect the lower interest rate.
Another way your lender can modify your loan is by extending the length of your loan. In rare cases, the lender will reduce the amount owed on the loan. Mortgage lenders are not required to work with borrowers to modify their loans. If you want to attempt this approach to avoiding foreclosure, remember that they may not approve a modification on your loan.
It’s important to note that the O’Bryan Law Offices is not a loan modification law firm. If you’re considering this route to avoid foreclosure, we will offer advice and guidance.
A short sale can prevent a homeowner from having a foreclosure on their credit report, but they will lose their home. If the lender approves a short sale, the homeowner will put the home on the market. Once the house is sold, the money will go to the lender to pay off the debt. In some cases, mortgage lenders may write off the remaining debt. Since the home is usually sold for less than the loan balance, it’s called a short sale. Remember that you should always understand the relationship between short sales and bankruptcy before going through with the sale.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is another option to stop foreclosure and prevent it from affecting your credit report. With a deed in lieu of foreclosure, the homeowner hands over the deed to the lender in exchange for not filing a foreclosure. If your lender accepts the deed, they can sell the property to recover their losses.
How Many Missed Payments Before Foreclosure Begins?
The number of missed payments that will begin the foreclosure process may vary from state to state. Generally, your mortgage lender will start the process after you’ve missed four consecutive payments.
Can Foreclosure Be Stopped After It Starts?
Yes, you can stop foreclosure after the process has begun. Homeowners can work on repaying their debts until the property has been sold to another party.
It’s important to contact a Louisville bankruptcy lawyer as soon as you receive a notice of foreclosure. This ensures you can begin working toward stopping the foreclosure process.
Contact a Kentucky Mortgage Defense Lawyer with O’Bryan Law Offices Today
The Kentucky foreclosure attorneys at the O’Bryan Law Offices have been helping clients recover from their debts and get a fresh start since 1994. You can still stop these proceedings if you have received notice that the mortgage company is pursuing foreclosure on your home or property. To meet with an experienced Kentucky bankruptcy attorney, call the O’Bryan Law Offices at 502-339-0222 to schedule a free consultation.