When you buy a house, you are required to sign a lot of documents. The two main documents that you sign are the promissory note and the mortgage. The promissory note is the document that tells everyone that you are borrowing a certain amount of money.
The mortgage incorporates the promissory note and says that if you violate any of the terms of the promissory note or the mortgage, the lender can file a foreclosure action against you. The foreclosure action asks the court for two things. The first is to determine how much money you owe the lender. The second request is to have the court sell the house at an auction to get their money back. Once the foreclosure is over and the property is sold at auction, there has to be a determination of how much money remains to be paid to the bank, if any. If the auction of the house does not pay the entire balance of the promissory note, attorney fees and costs, you will have a deficiency. So if the final judgment of foreclosure says you owe $100,000, and the house sells for $80,000 at the auction, you will have a balance of $20,000.00 owed to the lender. The lender must file a new lawsuit within one year to collect that deficiency or they are barred from attempting to collect the deficiency.
The process or the foreclosure lawsuit is simple. The lender will send you a letter notifying you of whatever your violation of the promissory note or mortgage is. Shortly thereafter, the lender attorney will file the foreclosure action. You will then be served by a process server to be notified that a lawsuit has been filed against you and whomever else has signed the promissory note or mortgage. If you have only signed the mortgage, the lender cannot ask you to repay any amounts due under the promissory note. They can only ask the foreclosure court to surrender your interest in the property. Once you have been served with the lawsuit (summons and complaint), you will have 20 days to respond. There are many lawyers who will defend a foreclosure lawsuit, but the only real purpose for most of those defenses are to delay the inevitable. In fact, sometimes it takes longer for the lender to get a foreclosure judgment if you do not respond than if you do. The only real consequence of filing a defense to a foreclosure lawsuit is that if you do intend to file for Chapter 13 bankruptcy or refinance, the attorney fees and cost will be much greater than if you don’t respond to the lawsuit at all. There are technical defenses that are real. If you have an attorney who represents you in a foreclosure, make sure he/she tells you what defenses will be raised or if the defense is for delay purposes only. If they are for delay purposes and you want to keep the house, you should speak to a bankruptcy attorney immediately. It may save you thousands of dollars by not having to go through the foreclosure process. Additionally, attorney fees or costs which are unreasonable or unnecessary can be objected to in the bankruptcy, but probably will not be objected to in the foreclosure action. So, the sooner you get a consultation from a qualified bankruptcy attorney the better. It may save you thousands, and your house. If you do decide to file for bankruptcy to save your house, once the bankruptcy is filed, the foreclosure lawsuit will end. The bankruptcy attorney will file in that foreclosure court what is called a Suggestion of Bankruptcy. That is a pleading which tells the foreclosure court they no longer have jurisdiction to hear any arguments regarding the foreclosure. The bankruptcy court has complete jurisdiction regarding that property once the bankruptcy is filed. A repayment plan will be filed in the bankruptcy court, and you will be required to begin making payments to the Chapter 13 bankruptcy trustee. That trustee will hold the money you are going to be paying monthly until your plan is confirmed.That will take several months. Additionally, the lender will be required to file a proof of claim.That is a document which tells you and your bankruptcy attorney what you are behind in your mortgage payments, taxes and insurance. Most times, these claims are inflated. If that is the case, your bankruptcy attorney will file an objection to the proof of claim which will either be resolved by agreement between the attorneys or at a hearing. Many times it is difficult for the lender’s bankruptcy attorney to justify the expenses because most of the time the bankruptcy attorney is a different law firm than the lender’s bankruptcy attorney. Because of that, the lender is going to have to hire the foreclosure attorney to prove the reasonableness and necessity of all of their fees and costs. So rather than doing that, an agreement is reached between the attorneys.
The bankruptcy process is a difficult process for the attorney. Your two main requirements in filing bankruptcy is to bring all the documents required by the Chapter 13 bankruptcy trustee, and make all payments required by the Chapter 13 repayment plan. There are a lot of documents required to be obtained prior to filing the bankruptcy. Once you bring those documents and the bankruptcy gets filed, the Chapter 13 trustee will require additional documents to be sent to her. Chapter 13 does not give your bankruptcy attorney a lot of time to obtain the new documents requested. For example, they will request these documents on a Thursday afternoon or a Friday before your hearing that is usually scheduled for the following Tuesday. So don’t be surprised when your bankruptcy attorney says we need a certain document immediately. This is a common occurrence. But the hiring of the right bankruptcy attorney is key. The process will be very simple for you while your attorney complies with all document requests. You will only be required to go to one hearing, which is a telephonic hearing. It literally takes two minutes once you get called. It’s recommended that you call in 15 minutes prior to the hearing so you can hear the questions that will be asked. The Chapter 13 trustee or her lawyer will ask basically the same questions to everyone. Your attorney will take it from there, and as long as all payments are made to the trustee, you will get a discharge of all of your debts, and will be current on your mortgage. Once the discharge is entered by the court, the state court foreclosure action will be dismissed.
If you are facing Foreclosure in Miami we may be able to help. Michael Brooks is a Bankruptcy attorney who offers services in Miami – Broward – Palm Beach counties. Contact us for a FREE consultation at 954-859-6662.
