Filing chapter 7 and surrendering home, can you help me understand foreclosure process?

by oliver on September 30, 2010

Question:

Filing chapter 7 and surrendering home, can you help me understand foreclosure process?

We will be surrendering our home in our Chapter 7 bankruptcy due to my husband being unemployed, and we can not afford the house any longer. Our lawyer briefly explained the foreclosure process to us, but my question is, do we have to go to court for the foreclosure as well? Or is everything taken care of through the bankruptcy?

Answer:

The filing of the chapter 7 bankruptcy and the foreclosure are two different things even if they overlap each other because of the BK. Most of the things, as well as the documents, that you need to accomplish will take place during your period of bankruptcy. A foreclosure process in the U.S. may take two courses namely the judicial and non-judicial one. The more common course is the non-judicial one, wherein the court is not involved. Once your lender files for a foreclosure against you, your will soon receive a Notice of Default. After receiving this notice, you will be given 90 days in order to make your mortgage current. You may want to apply for a loan modification or refinancing in order to prevent the foreclosure process from occurring. If no payment option, assistance or agreement was made between you and your lender after the 90 day period, a notice of foreclosure sale will be issued. This informs you that your house or property will be sold to the open market thru an auction at a specific date and time. Once a person or party gives the highest acceptable bid, he or she will become the new owner and will take over the property.

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