Written by Ben Tejes
Updated Oct 11th, 2023
This article is for informational purposes only. Ascend does not provide legal advice, and are not attorneys. If you'd like to speak with a bankruptcy attorney that serves your city, you can speak with one in a free consultation.
If you are facing impending foreclosure
and are looking for a way to temporarily or permanently stop the proceedings, you’re in luck. Also, you may want to stop a foreclosure before it's too late
There are a few ways that you can immediately stop a foreclosure auction. This includes filing for Chapter 13 bankruptcy,
filing a lawsuit, and reinstating the loan. Some of these will only stop the foreclosure for a short amount of time.
That said, there are some options that will permanently stop foreclosure.
What Can You Do To Immediately Stop a Foreclosure Auction?
So you may be wondering: Is there anything I can do to completely stop a foreclosure? Technically, the answer is yes.
That said, the only way to fully ensure your house won’t be foreclosed on is to stay current. Your foreclosure process can be stalled or stopped anytime up to when the new buyers sign their paperwork. Let’s take a look always you can stop a foreclosure once it has gone to auction:
1) File For Chapter 13 Bankruptcy
This option is a tricky one, but will definitely stop your foreclosure in its tracks. When you file for bankruptcy, an automatic stay is placed on everything you own, including your house — regardless of where you are in the foreclosure process. This is tricky though because filing for bankruptcy (especially Chapter 7) could ensure that your house is liquidated to help cover the other debt that you have. Many people file a Chapter 13 bankruptcy to protect their homes.
Understand the Cost Before You File Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a monthly payment plan and can be vastly different based on your finances.
For example, one person may pay $125 per month and another person would pay $5000 a month in a Chapter 13 bankruptcy. As such, it's vital to understand what you would be paying.
We built a free Chapter 13 monthly payment affordability calculator below. The calculator mirrors the Chapter 13 bankruptcy forms
to help you estimate whether a Chapter 13 bankruptcy would be affordable. If helpful, check out the foreclosure vs bankruptcy
article to help you understand options.
2) File a Lawsuit
First, let's cover filing a lawsuit
. Is there a chance that your lender has overstepped its legal boundaries in dealing with your foreclosure? Did they begin the process earlier than allowed?
Did they deny you any opportunity to make up the payments or work to find a solution? You may be able to file a countersuit, at which time the foreclosure proceedings would pause, giving you time to reevaluate your response. This option can be expensive, and if you lose your case, you will immediately be back where you started.
3) Reinstate Your Loan
Let's go through the reinstatement of your loan
option. This option would require a lot of cash upfront, but if you are able to pay back the payments that you missed, along with the interest and late fees that you accumulated, then your lender may stop the foreclosure proceedings and allow you to continue making normal monthly mortgage payments.
As you can see, your options are slightly limited when it comes to stopping foreclosure once the process has begun, but there are ways to do it. The best thing you can do once foreclosure comes into play is to communicate well with your lender. Doing so could be the difference between losing and keeping your home.
How To Stop Foreclosure In Your State Immediately
Each state has different processes that are helpful to understand when stopping foreclosure. Check out your state's guide below to help make an informed decision:
Let's now cover the foreclosure definition and how everything works.
What Is Foreclosure?
When buying a house, the furthest thing from your mind is how you are going to need to protect yourself from foreclosure. Unfortunately, foreclosure rates are on the rise.
Unexpected illness, unemployment, and divorce are among the top reasons foreclosure occurs in the United States. Fortunately, there are ways that you can stop a foreclosure, or at the very least, stall the progress. This article will look at what foreclosure is, what the process is, and how you can try to stop it from going forward.
Foreclosure is a legal proceeding
in which a lender attempts to seize and resell property from a borrower who has missed several mortgage payments in a row. The length of time between missed payments and foreclosure can vary from state to state, but on average, 90-120 days is the most that a lender will have to wait before being able to move forward with foreclosure. If you own a home, but you realize that something may prevent you from being able to make your monthly mortgage payment, it's important that you begin communicating with your lender as soon as you can — preferably before you even miss a payment!
If you are open and honest with your lender, there is a chance that you can utilize a few options available to you. These options include:
While these are all viable options
that you should look into, once you miss too many payments, your lender may be less willing to work something out with you. Because of this, it's important that you keep your lender aware of your situation, and don’t be afraid to ask for help.
If you are past the point of being able to benefit from one of these options, or you are unable to make any kind of payment for the foreseeable future, your lender may move to file for foreclosure. Let’s take a look at what the foreclosure process looks like.
Overview of Foreclosure Process
There is a set schedule for foreclosure proceedings
, which may vary state to state. Make sure you are aware of the specific timeline your state has so that you can try and stay on top of your payments if you are able.
- The first day that you miss a payment, a clock starts counting down the number of days since your last payment. After 30 days, your lender may be required to reach out with communication regarding loss mitigation options. Some of these options are listed above and are there to help ensure that you can find an alternate way to make your payments. If you are able, this is a great time to begin working with your lender to find out what options are available to you. If you are unable to make any payments, and can’t see a time in the near future where you would be able to, then these options won’t be useful to you
- After 120 days of delinquent payments (in most cases), your lender will be able to file a lawsuit of foreclosure. This means that the lender will provide the court with proof that:
- You took out a mortgage loan for a house
- You have missed a certain number of payments
If Proven, Then What?
If they can prove this, then the court will grant them an order of foreclosure auction. A foreclosure auction means the lender will then be authorized to auction off your house. Again, at this time, you can still work with your lender to see if there are any options available to you for alternative payments. Whether it is paying a smaller amount each month, or even deferring payments for a couple of months, your lender may be willing to work with you to stop a foreclosure.
- Once the court has granted your lender the authority to auction off the house, the lender will begin advertising the auction. On the day of the auction, several things can happen. Either a third party will bid on the house at a price higher than what you owe, at which point you will no longer owe your lender anything, the lender will credit the amount of the house to themselves and then take possession of the home (again, you will not owe anything if this is the case), or a third party will purchase the house at a cost lower than what you owe, at which time you still may be held accountable for the difference.
- Once the house is sold, you will be served a notice of eviction that tells you to vacate the property. You must do so within a certain period of time.
In total, the typical foreclosure process can take between 141 days- 6 months, depending on state regulation.
You may be staring at a foreclosure auction and wondering your immediate options. A foreclosure defense attorney
in your area may be helpful, but will it stop the foreclosure? Hopefully, this article helps explain your options and how the process works.
If you'd like to estimate your Chapter 13 monthly payment plan, feel free to take the free calculator below.