Bankruptcy can save your Milwaukee Home

So you have missed your first mortgage payment, your first grace period has expired, and you’re not sure what happens next.   The process a lender has to follow when foreclosing on your home differs by state.  In Wisconsin, a lender must file and personally serve a lawsuit against you.  But, in a nutshell, the series of events leading to foreclosure are pretty standard.

• After grace period has ended, your lender may assess a fee and your payment is considered delinquent.
• Once payment is delinquent, you’ll notice a hit on your credit score.
• After payment reaches 30 days late, your mortgage is considered to be in “default.”
• At that point, your lender will most likely have a legal letter drawn up, demanding that payment is expected immediately to avoid foreclosure.  That is the lawsuit against you.
• Foreclosure Resource Center

The most important part to remember is that you have just 20 days after being served the foreclosure lawsuit to respond.  If the deadline is missed, options to save your home decrease significantly.  Have your financial situation evaluated by a bankruptcy attorney familiar with your state laws.  Hiring an in-state attorney, and doing it quickly, may be the two quick decisions that save your home.

Chapter 13 and Chapter 7 Bankruptcy.  Your attorney’s first strategy may be to negotiate with your lender to modify loan terms, and avoid bankruptcy.  The other two options have quite different outcomes.

•  A court-approved Chapter 13 bankruptcy will allow you to cure the mortgage default over a length of time.  (Usually 3-5 years.)  In time your credit score will be repaired as well. This type of bankruptcy is designed to stop foreclosure and in most cases, is the best scenario for saving your home.  As soon as Chapter 13 is filed an “automatic stay” stops your mortgage company from continuing the foreclosure process.
• Chapter 7 will temporarily delay the foreclosure, but can’t provide the long-term protection that Chapter 13 can.    However, with few people having equity in their homes these days, this rarely happens.