CAN A BANKRUPTCY STOP FORECLOSURE?
WHAT ARE FORECLOSURE CONSEQUENCES?
WHAT IS A SHORT SALE?
CAN A BANKRUPTCY STOP ME FROM GETTING EVICTED FROM MY HOME, HOUSE OR APARTMENT?
YES, A BANKRUPTCY CAN STOP A FORECLOSURE EVICTION PROCESS.
STOPPING A FORECLOSURE EVICTION
If you fall behind on your mortgage payments, the mortgage holder (or 2nd mortgage holder if you have more than one mortgage) can proceed with the foreclosure process. In Tennessee, the Foreclosure Eviction process includes publication in a newspaper for a period of time and then a sale of your home or house. Usually the sale is conducted on the courthouse steps. If there is no buyer, the mortgage holder will usually place a bid to buy the home or house. After the foreclosure sale, the buyer (usually the mortgage holder who foreclosed on the home or house) will transfer the title into the name of the buyer. After that, your home or house can be sold. However, even though these steps have been taken, you can remain in your home or house until you are evicted. (See below about the eviction process)
Although a Chapter 7 bankruptcy liquidation may stop a foreclosure for a short period of time, the usual practice (if you want to keep your home or house) is to file a Chapter 13 bankruptcy payment plan which allows you to keep your home or house by paying off the past due mortgage payments over the length of the plan (usually 60 months) and then resuming the payment of your ongoing mortgage payment.
WHAT ARE THE CONSEQUENCES OF A FORECLOSURE?
Of course, you lose your home or house as a result of a foreclosure. A Foreclosure Eviction severely damages your credit. According to some credit experts, a foreclosure may damage your credit as much as filing a bankruptcy. In addition, you may have tax consequences from a foreclosure, if your home or house is bought at the foreclosure sale by the mortgage holder for less than the amount you owe on your mortgage. The IRS can say the difference between what you owed on the mortgage and what your home or house was sold for at the foreclosure sale, is income from the forgiveness of a debt. You may receive a tax information form (1099) from the mortgage holder showing this income was reported to the IRS. If this is your situation, we urge you to contact a tax expert.
WHAT IS A SHORT SALE?
A short sale is where your mortgage holder or holders (if you have more than one mortgage) agree(s) to let you sell your home or house for less than what is owed on the mortgage(s). You should be aware that this may also have tax consequences similar to a foreclosure.
Note: This information is simplified to make it easier to understand and is subject to qualifying under the Federal Bankruptcy law and to the operation of said law. This information should only be acted on with the advice of an attorney.