When Ohio consumers experience financial difficulties, they will likely explore their options to find remedies. While a bankruptcy filing may prevent foreclosure, a homeowner may be unsure of precisely when would be the most appropriate time to file. Should they file for bankruptcy in advance when they realize foreclosure is imminent, or should they wait until they receive advice that foreclosure actions have started?
Some are under the impression that a legal requirement under the Bankruptcy Code is to wait until a home is in foreclosure before filing, but that is a misconception. It is possible to reach agreements with creditors -- even the mortgage holder deserves consideration, and once compromises are reached, the ability to settle remaining debts can be considered. Negotiations may include the elimination of accrued interest and outstanding penalties, and this may influence the consumer's decision to file for bankruptcy.
It might be beneficial to time the bankruptcy filing according to the mortgage loan status. If the person waits until foreclosure commences, it will leave the opportunity to continue negotiations with the lender to reach a compromise. Upon the filing of bankruptcy, the mortgage lender can only offer a compromise with the bankruptcy court's permission.
Ohio homeowners who are facing this kind of dilemma can consult with an experienced bankruptcy attorney to discuss the best steps to take to prevent foreclosure. A lawyer can also assist with the required procedures in response to a foreclosure petition to protect the consumer's interests as the case proceeds. A seasoned attorney can evaluate the unique circumstances of the client and provide tailor-made legal guidance.
Source: homeguides.sfgate.com, "Do You Have to Wait for Your House to Foreclose Before Filing Bankruptcy?", Accessed on March 10, 2017