Get Out Of Debt

If your HOA is trying to force a foreclosure on your condo or townhouse due to unpaid association fees, then it may be likely that they have a lien on the property. This may have been the result of some type of confession of judgment if you ever fell behind or due to the association suing you in civil court. Otherwise there may be some clause somewhere in your HOA paperwork that lets them sue you for a foreclosure if you fall behind on the association dues.

Either way, the HOA is attempting to collect the amount of money they are owed by you for utilizing the services of the HOA (such as they may be). Because you have been unable to pay them for whatever reason, they are now trying to sue you and request that the courts auction off your property to satisfy the unpaid fees. Even if the arrears only amount to a few hundred or thousand dollars, it is quite easy for creditors to force a foreclosure on a large asset such as a property – do not stop worrying just because the HOA fees may be such a small dollar amount.

Bankruptcy, when you file it, stops the collection of any debts you include in the bankruptcy filing until the debts are either discharged or you begin a legal payment plan through the courts. So, the HOA will have to halt any collection efforts if you file Chapter 13 bankruptcy, as long as you include your HOA debt in the petition. You are seeking legal protection from your creditors, and all of them, including the Homeowners Association, must stop trying to collect as long as the issue is in the bankruptcy court.

Thus, the HOA is acting to collect a debt that they are owed by pursuing foreclosure against you. Filing bankruptcy will force them to put their foreclosure process on hold until you work out an arrangement with them. In most cases, you will have to enter a 3-5 year payment plan through the court system to pay back the unpaid fees. If you make it through the plan, then you will have no worries about them foreclosing on the house because you will have paid back any amounts that you were behind. Not being behind means that there is no reason for foreclosure.

But, if you fall behind on the bankruptcy payments, the HOA can have the debt taken out of the filing and have the automatic stay released and begin foreclosure again from the point at which they left off before the bankruptcy. As well, you will be responsible for your regular HOA dues, in addition to the portion you are paying through the court payment plan. Therefore, it is a waste of time, not to mention severely damaging to your credit, to file Chapter 13 if you are unable to afford the regular payment plus a portion what you are behind.

You should probably consult with an attorney or other financial adviser to make sure you are doing everything correctly and work out a budget so you do not fall behind on the payment plan. Although it is possible to file bankruptcy on your own, there are many reasons why it may be a better idea to rely on professional legal advice during such a potentially stressful time. Foreclosure situations, whether they are from the original lender or another party such as the HOA, almost require outside assistance, even if just to make sure you have been as careful as possible and will not have your solution thrown out on a technicality.

4 “Options HELP Homeowners Avoid Foreclosure – Real Foreclosure Defense!

Foreclosure prevention offers 4 choices, each depending on a property owner’s unique situation.

No matter what you might hear, avoiding foreclosure is NOT a one-size-fits-all solution.

Every property owner’s situation is unique:

1. Some property owners want to try to save the house.
2. Other property owners want to unload the house.
3. Some property owners clearly suffer documented (financial) hardship.
4. Other property owners clearly do NOT suffer documented (financial) hardship.
5. Some property owners have one mortgage…on which they are current.
6. Other property owners have 2 or more mortgages on which they’re many months in default…an HOA/condo lien…a code enforcement lien…on a funky property with scattered comps.

With just 6 examples, do you see what I mean?

No one-size-fits-all solution exists.

Warning: Florida is what is called a RECOURSE state. What this means to you is that losing a home to foreclosure is NOT the worst that can happen to you. Getting rid of the noose around your neck is your ultimate objective. In fact, some people actually walk away, simply to lose the noose. What they and you (probably) don’t know is that losing the property does NOT lose the debt obligation!

Discover the 4 most popular options for avoiding foreclosure and WHY you (or anyone you know in a similar situation) MUST NOT walk away from a house or allow a house to go into foreclosure.

FORECLOSURE IS WORSE THAN LOSING A HOME!

Let’s get something out of the way: in Florida (a recourse state), a CREDITOR (bank for instance) legally can repossess your house AND demand payment for deficiency.

Questions for you:

1. What is YOUR state’s foreclosure laws?
2. Are you in a judicial foreclosure state?
3. Are you in a RECOURSE state?

What this means is that if you walk away and/or the bank forecloses on you, the bank eventually will sell the house.

Let’s say you owe 0,000. The house is worth 0,000 (see below what happens after you walk away from the house). The bank adds another ,000 in legal fees & all other fees/penalties to push your debt obligation to 0,000.

Bank (debt owner) unloads your house for BELOW market value at ,000 just to get rid of it quickly. In fact, when you walked away from (or abandoned) the house months earlier, you didn’t know thieves broke in to the house and stripped it down, stealing everything inside AND outside the house including but limited to:

1. AC units – both compressor & air handler
2. Pool equipment
3. Pool cage – shredded to pieces.
4. Kitchen appliances – gone.
5. Kitchen cabinets, top and bottom – gone.
6. All copper plumbing lines in house – gone! Yes, it does happen.
7. All bathroom fixtures – gone!
8. Swiss cheese drywall – vandals punched holes in drywall at every inch of house.

I could go on and on…but you get the point.

Bank foreclosures, get JUDGMENT against you. In Florida, a judgment creditor has up to 20 years to chase you down for satisfaction of judgment.

* Judgment creditor can get a garnishment order against you – and garnish your wages.
* Judgment creditor can seek and receive a bank levying order – and empty your bank account(s).

Bottom Line – You CAN lose your home (and) be on the hook years later for 0,000 debt obligation!

So, what 4 choices exist for property owners?

1. Loan modification — Mortgage debt owner modifies the terms of the property owner’s mortgage to make the payment affordable. This modification may or may not involve principal reduction;

2. Short refinance — Property owners with more than one mortgage and the minimum credit scores to qualify to refinance both mortgages into one mortgage with a better payment and interest rate might qualify for short refinance;

3. Short sale — For property owners who don’t want to keep the home and/or can’t qualify for loan modification or refinance, short sale (hopefully) allows the property owner to sell the house for today’s value and walk away with ZERO deficiency owed – FULL PAYOFF AND LOAN SATISFACTION. That is the objective of short sale. Whether or not that happens depends on the property owner’s true financial condition. By the way, a short sale simply is a sale where the mortgage debt owner allows the house to sell for LESS than what the borrower owes;

4. Bankruptcy — Some property owners never consider short sale when they can’t afford a house. They believe their only option to get our from under a house is bankruptcy. What you need to realize is the bankruptcy attorney with whom you consult doesn’t get paid to advise you NOT to file bankruptcy. Therefore, YOU must know your options. If you have overwhelming debt in addition to a house where the “bank” or “banks” will not approve short sale, you might be a candidate for bankruptcy. If you want to keep the house, some bankruptcy attorneys advise filing bankruptcy to discharge any 2nd mortgage and to stop the bank from foreclosing as the bankruptcy judge forces the bank to modify their mortgage.

To choose the best strategy for you, talk with your realtor, real estate attorney AND your tax professional. Clearly, I am NOT an attorney and I don’t pretend to be. I’ve sat through many (many) meeting with customers and their attorneys. In no way should you think there’s a one-size-fits-all solution for keeping or getting out from a house.

Sarasota foreclosures always get me thinking about what happened (or didn’t happen) to cause foreclosure. Clearly, foreclosure is not just a Sarasota real estate issue. This is nationwide! If you or someone you know wants to buy or sell a house in or around Sarasota, PLEASE call me now to discuss your options. Should you ask me, I gladly will refer you to a VERY INFORMED foreclosure defense attorney. Please scroll down to leave a comment, share an experience or ask a question. What foreclosure situation has a friend of yours encountered?