With the COVID-19 foreclosure moratoriums over, housing foreclosures are once again on the rise nationally. In fact, in September of 2023, we saw home foreclosures on the rise by a whopping 18.4% from this time last year. Foreclosures in Indianapolis have also been increasingly more common.

Indiana has not been immune to this national trend. Ranked at #12 in the nation for foreclosures, Indiana has a foreclosure rate of one in every 3,158 homes. With 2,911.562 housing units in the Hoosier state, 922 homes went into foreclosure just in October. 

With this trend unlikely to dissipate any time soon, Indiana homeowners need to know the laws around home foreclosures. 

Foreclosure Laws in Indiana

If you or a loved one are facing foreclosure, chances are there are a lot of feelings of being overwhelmed involved. That’s why knowing the laws that pertain to said foreclosure is vital in calming your anxiety so you can face it head-on. 

Federal law dictates that foreclosure measures cannot be started until your payment is at least 120 days overdue. In the state of Indiana, law dictates that the lender must contact you at least 30 days prior to filing the suit with the following information:

• The lender must inform you of the default. 
• The lender must provide you guidance in seeing the assistance of a mortgage foreclosure counselor.
• The lender must inform you of your rights such as the right to pay off the entire debt to stop the sale.
• The lender must provide you with contact information for the Indiana Foreclosure Prevention Network. 
• The lender must provide a warning to you about seeking help from untrustworthy sources looking to help you avoid foreclosure. 

Once this contact has been made, the lender has 30 days before they can file the lawsuit for the homeowner to have time to research their options. 

The Foreclosure Process

If a lender is foreclosing on a property, the first thing they will have to do to initiate the process is to file a lawsuit in court to initiate a request for a foreclosure sale. Once notified, the homeowner has 20 days to file an answer to the complaint. If the homeowner does not do this, the lender will request a default judgment so they can continue with the foreclosure sale. 

If the homeowner chooses to defend the lawsuit, then litigation will begin. During this time, the lender will most likely ask the court for a summary judgment, which asks that the court grant a judgment in favor of the lender. If the court grants one or the homeowner loses, your home can be sold at auction. 

In most instances, the sale cannot occur until at least 3 months after the lawsuit has been filed. Once the sale can move forward, the sheriff will post a notice of sale at the courthouse and advertise the sale in the local newspaper. When the first advertisement is posted, at least 30 days before the sale, the sheriff will serve a notice of sale to the homeowner. 

Can You Get Out of Foreclosures in Indianapolis?

If your lender files a lawsuit for foreclosure, all hope is not lost. There are a few ways you can potentially stop a foreclosure on your home.

These options include:

1. Reinstating the Loan: If the homeowner reinstates the loan before the court enters the judgment, the foreclosure will be postponed. However, if another payment is missed, the foreclosure can commence. 
2. Redeeming the Property: Redeeming the property means paying off the full amount of the loan before the foreclosure sale continues. 
3. Filing for Bankruptcy: If you’re running short on time to stop foreclosure, filing for bankruptcy will stop proceedings immediately. An automatic stay goes into effect at this point which, at least temporarily, stops the lender from being able to collect on the debt through a sale. 

Foreclosures in Indianapolis? Receive Guidance from Sawin & Shea, LLC

If you’re facing foreclosure, the sooner you can get the counsel of experts who understand your rights, the better. The attorneys of Sawin and Shea have years of experience navigating through Indiana’s foreclosure laws. We can answer your questions about foreclosures in Indiana and help you better understand your rights to stay your home’s foreclosure with Chapter 13 bankruptcy. Contact us today at 317-759-1483 to discuss your case.

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What is Chapter 7 Bankruptcy?

Filing for Chapter 7 bankruptcy, also called liquidation bankruptcy, allows you to discharge all or most of your debt. However, a court-appointed trustee can sell any nonexempt property. Upon filing a Chapter 7, you receive automatic court-oredered protection from creditors and aren’t subject to lawsuits, repossessions, or wage garnishments. 

Some of the most common reasons that people file for Chapter 7 bankruptcy include debt collection lawsuits, sudden loss of income, medical bills, overwhelming credit card debt, and separation or divorce. 

From July 2020 to June 2021, there were 15,719 bankruptcies filed in Indiana. In the United States, Chapter 7 bankruptcy is the most common type of bankruptcy filed.

Can I Keep My Home?

The answer to that question depends on how much equity you have in the real estate. It is important to have a good valuation of the property and a solid number for what you owe against the house. People with real estate can keep their home when they file for Chapter 7 bankruptcy as long as their equity does not exceed Indiana’s Homestead Exemption. The Homestead Exemption is the amount of equity in your home that the state of Indiana will allow you to keep before a bankruptcy trustee can seize it. If the equity in your home doesn’t exceed the limits, you can keep it. 

Under Indiana’s Homestead Exemption, you can keep up to $22,750 in equity in your home if you’re single and up to $45,500 if you’re married. There is a special unlimited exemption available for married couples holding real estate as tenants by the entirety as long as there is no joint unsecured debt. 

It is possible to lose your home during Chapter 7 bankruptcy if the equity in your home is more than the exemption amount. This is how you can figure that out:  

• Figure out the fair market value of your home
• Subtract the homestead exemption
• Subtract the amount you owe on the mortgage
• Subtract any additional property liens

If the resulting number is negative, your home is protected from the bankruptcy trustee. 

Can I Keep My Car When I File for Chapter 7? 

There is no specific exemption for vehicles in the state of Indiana, but you can use the personal property exemption, which allows you to protect up to $12,100 worth of personal property if you’re single or up to $24,200 if you file jointly.  

Will I Lose My Furniture in Chapter 7?

There is a way to hold onto personal property, such as furniture or a recreational vehicle, by using available amounts of the personal property exemption.

What if I Have More Property Than You Can Exempt in a Chapter 7?

If you have nonexempt property that you do not want to lose through the Chapter 7 liquidation process, then a Chapter 13 bankruptcy may be in order. In Chapter 13 you enter into a reorganization plan that forces your creditors to take what the law says you can afford, or what you have to pay them. Creditors must receive what they would have received had you gone into a Chapter 7 liquidation. The obvious difference here is that you do not have nonexempt property taken and sold. You “buy back” your nonexempt equity over the 3 to 5 year reorganization plan.

Compassionate Chapter 7 Bankruptcy Representation

At Sawin & Shea, LLC, we understand that filing for Chapter 7 bankruptcy is intimidating. With over 75 years of bankruptcy service experience, we can help you and your family get the fresh start you deserve. If you are wondering when filing for bankruptcy what can you keep or have any other questions, we have the answers. We are committed to providing compassionate and non-judgmental representation to all of our clients. Our attorneys know exactly what is a discharged bankruptcy and have helped thousands of people just like you. We are here to help.

Speak to a bankruptcy attorney today at (317) 759-1483 or contact us online. 

The post Can I Keep My Home in a Chapter 7 Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you are facing foreclosure or bankruptcy, the best way to determine which choice is right for you is to speak with an experienced bankruptcy attorney. In this article, we will offer you guidance, but speaking with an attorney one-on-one can provide you with a better understanding and a more personalized solution. 

If you have questions and are considering bankruptcy, don’t hesitate to reach out to our team at Sawin & Shea, LLC for assistance. 

What’s the Difference?

A foreclosure is a process used by mortgage lenders to recover their money when a homeowner defaults on their mortgage payments. During this process, the lender will typically repossess the house and then sell it off at a public auction. A bankruptcy, on the other hand, is a process that debtors can use to eliminate some of their debt or establish a payment plan for their debts so they can potentially save some of their assets or property. 

Bankruptcy vs. Foreclosure: Which is Worse?

Before you can decide which option is worse or which is best, it helps to understand the difference involved in these two processes, which are laid out in the table below: 

Pros and Cons to Both

Which is worse, bankruptcy or foreclosure? This depends on your attachment to the home. In a foreclosure, you will without a doubt lose the home and you could end up owing money if the sale does not cover your debt. With bankruptcy, however, you could potentially keep your home. 

When you file for bankruptcy, an automatic stay goes into effect, which keeps the bank from repossessing your home during the case. As part of the bankruptcy process, you could end up keeping your home. However, bankruptcy does not always stop a foreclosure from happening. You could still end up having to surrender the home to your lender. However, the difference is that after this happens and the bankruptcy is finalized, if there are any remaining debts, they will likely be discharged. 

Bankruptcy Chapter 13 vs. Foreclosure

There are two types of bankruptcies that you could file for if you are facing foreclosure. In a Chapter 7 bankruptcy, you might not be able to ultimately keep your house from being surrendered to the lender. However, at the end of Chapter 7, any remaining debts will be discharged, so you will not end up owing a deficiency claim on the foreclosure. 

In Chapter 13, you may be able to keep your home, but you will have to work out a payment plan, so you will still have to pay money to your lender. Most Chapter 13 payment plans last three to five years.

In a foreclosure, you will lose the house, and whether you owe money or not will depend on whether or not the sale covers the debts. In Chapter 13, you will keep the house, but you will have to make enough money to make payments for three to five years. 

Bankruptcy vs. Foreclosure On Credit Report

Both options aren’t ideal with regard to your credit score. A foreclosure will remain on your credit report for seven years, whereas a bankruptcy will remain for seven or ten years. However, while bankruptcy may  affect your credit score for longer, it is considered the better option. This is because foreclosures are viewed more seriously by lenders than bankruptcies that don’t include the house. 

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we provide compassionate and understanding representation to those struggling with debt and filing for bankruptcy. If you are facing foreclosure and want to consider bankruptcy as an alternative, we are here to help.

Contact us at 317-759-1483 or send us an email for a free consultation today!

The post Bankruptcy vs. Foreclosure appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

In this blog, we’ll share details about loan modification, who is eligible, how to obtain one to stop foreclosure, and how a lawyer for foreclosure can help.

What is foreclosure?

Foreclosure is when a lender exercises its right to seize your mortgaged property if you fail to repay your loan. The process usually begins when you miss a mortgage payment. If you go 90 days without making a scheduled payment, your mortgage will go into default. Your lender will then notify you that you are in default and begin foreclosure proceedings. If your lender has gained legal authority to foreclose, you’ll have to vacate your property. It will then be sold “as-is.”

In 2022, the national foreclosure rate was .23 percent of all housing units, down from .36 percent in 2019 and the peak of 2.23 percent in 2010. While it is the 17^th largest state by population, in February 2023, Indiana had the 5^th highest foreclosure rate in the nation at a rate of one in every 2,956 homes.

What is a mortgage loan modification?

A loan modification is a change in your loan terms agreed upon between you and the loan owner to help you avoid default and avoid foreclosure to keep your home. In most cases, a loan modification makes your mortgage payments more affordable. The goal is to reduce your monthly payments so you can afford your loan each month.

In a loan modification, your lender would agree to one or more of the following options to reduce your monthly payments: 

      · Lower the interest rate if they are currently lower than when you originally locked in your loan

      · Extend the loan’s term, which gives you more time to repay your loan and lower your monthly payments 

      · Much less commonly, your lender may agree to allow you to pay some of your principal balance later to help reduce payments

      · Modify your loan from an adjustable interest structure to a fixed-rate loan, which is helpful if you need a predictable monthly payment.

Who is eligible for a mortgage loan modification?

Your home must be your primary residence to qualify for a loan modification. You will also have had to have gone through a financial hardship that caused an income loss or reduction, such as taking on a lower-paying job, being unable to make your monthly payments, or being in danger of falling behind. Many lenders require you to be in default before agreeing to a loan modification. 

Lastly, you’ll have to show that you can make regular payments under the terms of the loan modification agreement. Beyond that, different investors have specific terms under which they will approve loan modifications. Although loan modifications can stop foreclosure, they can also negatively impact your credit score, making it difficult for you to purchase property down the road.

How to get a loan modification

The process to obtain a loan modification varies for each lender. Still, in most cases, you need to apply through a “borrower response package” or a “loss mitigation application.” Some require a hardship letter that explains why you need the loan modification. Other lenders automatically evaluate you for a mortgage modification if you are behind by a certain number of payments. If you’re denied, you can file an appeal with your lender.

At Sawin & Shea LLC we use Chapter 13 bankruptcy in conjunction with a loan modification program to help people with significant delinquencies on mortgages. Through our program a personal modification representative will work with you and your lender though a Court approved document portal. This provides a great opportunity to get all involved on the same page and helps to facilitate a solution. If a modification is not forthcoming, the Chapter 13 plan provides other opportunities to get the mortgage back on track.

Bankruptcy assistance for Indianapolis area homeowners

The attorneys at Sawin & Shea, LLC have experience helping Indianapolis and surrounding county homeowners prevent foreclosure by combining Chapter 13 bankruptcy with mortgage modifications. If you are wondering, “Will loan modification stop foreclosure?”, our attorneys are committed to providing compassionate, non-judgmental representation to all our clients. Contact us today for help.

The post Will a Loan Modification Stop Foreclosure? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you’re at risk of losing your house because of missed mortgage payments, you need to take immediate steps to ensure that you retain your home. Fortunately, Chapter 13 bankruptcy offers debt relief and a solution for stopping mortgage servicers from repossessing your home.

What Is an Adjustable-Rate Mortgage?

An adjustable-rate mortgage is a home loan that features variable payments. Adjustable-rate mortgages’ interest rates and monthly payments are determined by market conditions. This differs from fixed-rate mortgages, where debtors pay a set interest rate for the entirety of the loan. Many Americans are not qualified for a fixed vs adjustable-rate mortgage because their qualifications tend to be more strict.

In addition to standard adjustable mortgage rates, many individuals and families obtain hybrid adjustable-rate mortgages, meaning the mortgage has a set introductory period in which the interest and payments are fixed. For example, if the introductory fixed rate is three years, the debtor would pay non-adjusted monthly payments for three years. After that, their payments would increase or decrease depending on the market.

Right now, hybrid adjustable-rate mortgages may appear appealing because their introductory interest rates are frequently lower than fixed-rate mortgages and have smaller monthly payments. Additionally, there’s a chance that market conditions will cause the mortgage interest rate to decrease, saving debtors money on their monthly mortgage payments.

Although adjustable-rate mortgages have potential advantages, they also come with significant risks that can potentially ruin you economically depending on your financial situation. Future interest rate adjustments can cause your mortgage interest rate and monthly payments to increase, creating financial discomfort.

In 2022, the Federal Reserve raised interest rates to 4.4%, which went into effect on December 15, 2022. That means that interest rates on adjustable-rate mortgages will also increase.

Of course, that doesn’t mean the Fed will continue raising interest rates soon, necessarily, but there’s always uncertainty with adjustable-rate mortgages. Interest rates and monthly payments can increase to the point in which debtors fall behind on their mortgages. 

Typically, mortgage servicers cannot foreclose on a home until 120 days after a debtor falls behind on monthly payments, but if you find yourself missing payments, you need to take immediate steps to protect your home.

Saving Your Home From Foreclosure Through Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers a solution if you’ve fallen behind on monthly mortgage payments. Chapter 13 reorganizes your debt into a three-to-five-year repayment plan. Once you file, you’ll receive an automatic stay stopping any action against your home, meaning that mortgage servicers cannot repossess it as long as you make on-time payments according to your repayment plan. This is even the case if you already have a foreclosure up to the point of the Sheriff’s sale on the home.

This differs from Chapter 7 bankruptcy because debtors are at risk of losing their homes during the Chapter 7 liquidation process.

In addition to being able to keep your home with Chapter 13, you’ll also receive an automatic stay for your vehicle and other possessions.

What Happens to My Mortgage If I Declare Bankruptcy?

It’s important to note that declaring Chapter 13 bankruptcy will likely NOT wipe out your mortgage. Instead, it can help get you back in good standing with your mortgage servicer if you’ve fallen behind on payments. Your Chapter 13 repayment plan will reorganize your debt and include your overdue mortgage payments.

While you undergo Chapter 13 bankruptcy, your mortgage can accumulate late fees, but your mortgage servicer cannot charge you these fees unless you fail to complete your Chapter 13 repayment plan. They can charge you late fees if you drop out of the bankruptcy process or if the bankruptcy court dismisses your case. Additionally, the mortgage servicer can charge you late fees if you convert to Chapter 7 bankruptcy.

One final note is that your adjustable-rate mortgage payments can potentially increase according to your original contract once you file for Chapter 13 bankruptcy. The mortgage servicer is required to inform you or the bankruptcy court about your increased monthly payments. If they fail to offer proper notice and surprise you with increased payments after the bankruptcy process, they may not be legally able to charge you with the enlarged monthly payments.

In the event that the mortgage servicer surprises you with increased monthly payments or engages in another unlawful act, such as harassment, you need to contact a Chapter 13 bankruptcy attorney.

Can You Get a Mortgage After Bankruptcy?

Getting a mortgage after bankruptcy is not impossible, but you will need to be patient. All cases are different, but there are no legal restrictions to obtaining a mortgage or refinance post-bankruptcy. An experienced bankruptcy attorney can help you answer questions about mortgages during and after bankrutpcy.

Contact a Central Indiana Chapter 13 Bankruptcy Attorney

If you’re considering filing for Chapter 13 bankruptcy, you don’t need to go through it alone. Contact Sawin & Shea for experienced legal support in your bankruptcy case. We’ll help you on your journey to becoming debt free.

Get a FREE case consultation by calling our office at 317-759-1483, or you can contact us online here.

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What is Lien Stripping?

Chapter 13 lien stripping eliminates junior liens when your property is worth less than the remaining balance of your primary loan. For example, if you owe $300,000 on your first mortgage and your home only has a market value of $250,000, you can strip a secondary mortgage.

When a court approves the stripping of a lien, after your discharge those lenders can no longer collect debts on that lien or threaten to foreclose on a home for missed payments. Under current bankruptcy law, this lien stripping is only available in Chapter 13 bankruptcy. It is not now available in Chapter 7 liquidation cases.

Why You Can Strip Liens with Chapter 13 Bankruptcy

When filing under Chapter 13, you can strip liens on real property considered “wholly unsecured.” So what makes a lien unsecured? It means that in the event of a sheriff’s sale, no money will be granted to the lender. If a house worth $150,000 is sold and the primary lender is owed $200,000, that means the secondary mortgage lender will not receive money for the loan. All of the money on the foreclosed-upon property went to the primary lender. If you have a second and third mortgage but you owe more money on your first mortgage than what your house is worth, you can get rid of your second and third mortgages.

What Happens to a Stripped Lien?

When you successfully strip a lien when filing for Chapter 13 bankruptcy, the lien undergoes the same treatment as other unsecured debts. Unsecured debts, such as debt accumulated from a credit card or medical bills, are discharged when you finish filing for Chapter 13. The lenders of unsecured debts may receive a small amount, or they may receive nothing. Once the lien is discharged, the lender has to remove it from your home, or in the case of a credit card, the lender has to wipe out the debt.

How Lien Stripping and Chapter 13 – Can Save Your Home?

Lien stripping when filing Chapter 13 bankruptcy reduces your overall debts, which may enable you to financially recover and pay off your primary mortgage. Fortunately, Indiana is a judicial foreclosure state. This means that even if a house is foreclosed upon, residents still own their property until the conclusion of a sheriff’s sale. When filing Chapter 13 bankruptcy, mortgage lenders have to comply with the established court-approved debtor’s repayment plan. If someone filing under Chapter 13 gets a repayment plan approved that involves monthly payments plus delinquency charges, they can potentially save their home from a sheriff’s sale.

Get Assistance with Chapter 13 and Lien Stripping with Sawin & Shea, LLC

If you’re an Indiana resident struggling with debt, consider seeking legal assistance. Sawin & Shea, LLC has experienced attorneys that can help you through the process of bankruptcy and lien stripping. Our compassionate attorneys have a great deal of experience in handling bankruptcy cases and will help take the next step in overcoming your debts. We even offer additional guidance after your bankruptcy case concludes.

Get a free consultation today by calling 317-759-1483, or you can click here and schedule a video consultation!

The post Second Mortgage Lien Stripping With Chapter 13 Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Normally, filing for a mortgage forbearance is a reasonably straightforward process. You would have simply contacted your lender and provided any necessary documentation for them to determine your eligibility for reduced or paused payments until you got back on your feet. With the CARES Act, asking for forbearance was made even more simple due to the fact that most individuals were universally suffering from pandemic-related hardships. However, the situation was a bit more complicated for those already in bankruptcy or considering it.

What is the CARES Act?

After the pandemic hit and it was evident that Americans were struggling to make ends meet, the government took action and enacted the CARES Act. The Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) was created to provide relief and assistance for workers, families, small businesses, and other industries. Through this act, a number of programs were implemented to directly address specific issues related to the onset of the pandemic. One such program was the COVID hardship forbearance program.

How Does the CARES Act Affect My Ability to Seek a Mortgage Forbearance?

The COVID hardship forbearance program is available to most individuals suffering financial hardship. However, there are some stipulations. To be eligible, you must:

• be experiencing financial hardship directly or indirectly related to the COVID-19 pandemic
• have a federally backed HUD/FHA, VA, USDA, Fannie Mae, or Freddie Mac loan

*If your mortgage is not federally backed, you would need to check with your service provider as they may offer other similar options.

Outside of Bankruptcy:

For those not dealing with bankruptcy, the CARES Act allows those affected by the pandemic to ask for forbearance to suspend payments on their federally-backed mortgage loan for up to six months. In some situations, borrowers may be able to extend the forbearance for an additional six months.

Due to the CARES Act, lenders must allow this forbearance if borrowers meet the two conditions listed above. This act ensures that extra interest and fees will not accrue during the forbearance, and the borrower’s credit rating will not be affected.

While in Bankruptcy:

For borrowers in a Chapter 13 bankruptcy or considering filing for bankruptcy, the situation can vary depending on the jurisdiction. However, when the CARES Act was passed, new language was added to the bankruptcy code that may allow those in mortgage forbearance to still file for bankruptcy.

While the bankruptcy code does not have any clear guidelines for this particular situation, considerations may be made based on your local district’s bankruptcy court regulations. Generally, when changes are made to a Chapter 13 repayment plan, such as a mortgage forbearance, all parties must be notified. This includes all creditors, the Debtor’s attorney, the servicer, and the Chapter 13 trustee.

How to Provide a Temporary Mortgage Forbearance Notice While in Chapter 13 Bankruptcy

Currently, there are no set rules for how to give notice of forbearance for those affected by the pandemic while already in or considering bankruptcy. However, the National Association of Chapter 13 Trustees recently provided a few basic options for how mortgage lenders can go about the process:

1. File a general notice with the bankruptcy court on the docket indicating the terms of the forbearance.
2. File a general notice on the claims register outlining the terms of the forbearance.
3. Send a physical letter to the Chapter 13 trustee, the bankruptcy filer, and all other interested parties indicating the forbearance terms.
4. File a notice of payment change on the bankruptcy court claims register outlining the forbearance terms.

Of the options above, there is no right or wrong choice. Each option will come with its own set of advantages and disadvantages depending on your locality. Services should utilize whichever option works best for them and the local bankruptcy district.

How Sawin & Shea LLC Can Help

At Sawin & Shea LLC, we understand how devastating the pandemic has been, especially for those who were previously struggling and considering bankruptcy. Our team has years of experience helping those suffering from unmanageable debt. We believe in providing compassionate and understanding representation to all of our clients. Our attorneys have experience in bankruptcy cases and are here to help you through the process every step of the way. Contact us for a free debt relief consultation.

The post The CARES Act, Consumer Bankruptcy, and Mortgage Servicing appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

One of these options is a short sale. This is when a lender agrees to take less than the total amount owed on the real estate from the sale.

Facts About Short Sales:

• You still have to find a buyer for your house, and it needs to be a committed buyer who won’t walk away during the difficult process.
• Your lender has to approve the short sale and will require quite a bit of documentation and paperwork from you.
• The lender may not agree to a short sale. For the lender, it’s all about the bottom line, and if they think they can get more money from foreclosure, they won’t agree to a short sale.
• The lender may or may not forgive the difference between what the house is sold for and what you owe.
• Even if the lender does forgive the amount of the loan not paid upon closing, you may be taxed on this money by the IRS.
• A short sale is a significant negative on your credit score.
• Despite its name, a short sale is not a short process and can take up to a year to complete. If you are struggling to pay other debts, bankruptcy will make more sense for you.
• Because a short sale is such a complicated process, you are advised to work with a bankruptcy attorney who understands the complexities of cases like this and who can protect you against a deficiency judgment or other liabilities that may pertain after the sale.

What If You File for Chapter 7 Bankruptcy? Should You Still Go Through With Your Short Sale?

In a word (okay, two words), probably not.

• Since you will be losing the house anyway, you may as well surrender the house and walk away without worrying if the lender will forgive your debt.
• You also won’t have to worry about possible tax owed if the lender forgives your debt.
• You won’t have to show your house or deal with potential buyers and the stress of hoping/wondering whether or not they will buy your house.
• On the other hand, you will still be liable for homeowner’s association fees until the bank/lender manages to foreclose on your house.

There are many things to consider when you are having difficulty maintaining payments on a real estate mortgage. The Indianapolis bankruptcy attorneys at Sawin & Shea LLC can help you find the best way out. We offer free consultations with an attorney who can bring your financial issues into focus.

How Does a Short Sale Affect My Credit? Is It Better Than Bankruptcy?

• Both short sales and bankruptcies involving foreclosures will show up as negative hits on your credit report. What is worse? It’s hard to say.
• A short sale can appear on your credit reports as “not paid as agreed.” This means that your lender didn’t receive the full amount that was agreed on when you signed your loan. The debt will show as “discharged in bankruptcy” if you file a Chapter 7 or 13.
• A Chapter 7 bankruptcy will stay on your credit report for 10 years.
• A short sale can stay on your credit report for up to 7 years.
• A foreclosure (without bankruptcy) will stay on your credit report for 7
• Filing for bankruptcy can start the process of having most of your debts discharged. This allows you to focus on paying important debts as you begin your fresh start.
• Remember that you may still owe taxes after a short sale. After it happens, you will receive a form called IRS Form 1099-C. This will show the difference between what you owed on your loan and what the house sold for (the amount the lender agreed to accept). This savings amount is taxable income. Speak to a tax advisor to understand your tax responsibility. This is not a problem for debts discharged in bankruptcy.
• Although a short sale takes a long time (because there are so many entities who have to sign off on it), personal bankruptcy can help you immediately by putting into effect the automatic stay. (An automatic stay temporarily prevents creditors, collection agencies, government entities, and others from hounding you for money that you owe.)
• A typical Chapter 7 bankruptcy takes 4-6 months, so you will feel a sense of relief far sooner than if you decided to move forward with a short sale alone.
• In a short sale, you may incur liability as a seller if the buyer discovers undisclosed defects in the house and sues you. This can, in cases where the buyer gets a judgment based upon fraud, lead to debts that are non-dischargeable in bankruptcy. If the property is in poor condition, why take this risk?
• If you have a second mortgage or any other type of lien against your real estate, the difficulty in successfully completing a short sale is significantly greater. Furthermore, there is a much greater chance of still owing on house-related debt despite the short sale.

Basically, if you are only concerned about paying your mortgage and are able to pay all of your other debts, it may be possible that a short sale is right for you as a debt relief option.

On the other hand, if you are dealing with medical debt, credit card debt, or other financial debts in addition to your delinquent mortgage payments, bankruptcy may be the most sensible solution for dealing with all of your financial problems at the same time.

Either way, you will need the expert advice and guidance of an experienced bankruptcy attorney.

At Sawin & Shea LLC, we understand that hiring an attorney to help you file bankruptcy is scary. We are committed to providing compassionate and non-judgmental representation to all of our clients. Our attorneys have helped thousands of people just like you get the fresh start they deserve. We are here to help.

Speak to an attorney today at (317) 759-1483. Or contact us online.

The post Short Sales and Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

How does filing for bankruptcy affect a possible eviction? There is good news and bad news.

The good news:

Filing for bankruptcy can buy you a little time as you attempt to stay in your home or find somewhere else to live.

The bad news:

You will not be able to stay where you are indefinitely. Even when we use bankruptcy to cure arrears on a lease, there is no way to force a landlord to renew a lease at the end of its term.

The procedure:

• Despite your best efforts, you have been unable to pay your rent and find yourself behind. The landlord’s next step is to give you an eviction notice.
• The eviction notice will warn you that you have 10 days in which to pay the rent you owe or face eviction. It doesn’t mean that at the end of 10 days, the landlord can force you out of your home. It just means that he or she will proceed to the next step if you haven’t paid.

How you will receive the 10-day eviction notice:

• The landlord or his representative will present the notice to you directly if possible. If not, the eviction notice can be taped to your door or left in a conspicuous place.
• The notice must include the information set out in Indiana Code 32-31-1-7 Section 7.

What you should do:

• If you can pay the rent or come to an agreement with the landlord to pay everything you owe by a certain date or to leave on a certain date, do so.
• Make sure that you have a signed agreement laying out all of the specifics.
• If working things out with the landlord is impossible and you are already considering filing for bankruptcy, now is the time to do so.

Consult a bankruptcy attorney as soon as possible because if you wait past the 10 days, things get much more difficult.

• At the end of the 10 days, the landlord will go to court to file the formal paperwork to evict you.
• You will receive a copy of this paperwork and will have to attend a hearing with a judge. If the judge approves the eviction (and if you owe rent, there is no reason to oppose it), the judge will issue an eviction judgment or judgment of possession.
• He or she will fix a date for you to move out.
• The judge will give the landlord a court order for eviction to use if you don’t move out by or on the agreed-upon date.
• A sheriff will oversee your removal from the property. This could happen in a week, several weeks, or even months, depending on how busy the court backlog is, but the amount of rent you owe will continue to accumulate as you wait.

Bankruptcy:

• If you file for bankruptcy after the eviction judgment, you are out of luck and can still be evicted, which is why you should consult a bankruptcy attorney as soon as you receive your initial 10-day eviction notice, if not before.
• If you do file for bankruptcy before the judgement evicting you is entered, an automatic stay will be put in place. This will prevent your creditors from harassing you and pursuing collection lawsuits; it will also prevent your landlord from evicting you immediately.

Again, there is good news and bad news about this automatic stay.

The good news:

• Without being hounded to pay all of your other bills and with the prospect of them being discharged in the future, you may be able to have enough money to pay the rent you owe and avoid the eviction problem.
• Another possible scenario is that you find another place to live and move out without being evicted. If you have filed for bankruptcy, all of the back rent that you owe (up until the point that you filed) will be discharged with the rest of your debt and will be removed from your credit report in 7-10 years, depending on the type of bankruptcy you file.

The bad news:

• An automatic stay is not a permanent miracle — it is simply a pause to let you catch your breath. Your landlord can file a motion to lift the automatic stay, and it will probably be granted. You can then be evicted in state court.
• In Indiana, 23,332 people filed for bankruptcy, and many of them were able to avoid being evicted from their homes. On the other hand, Indianapolis has the second-highest eviction rate in the nation, according to a 2019 Princeton study. Don’t try to maneuver your way through the intricacies of eviction and bankruptcy laws and procedures on your own.
• For information about evictions from your house, read our blog, Covid 19, Evictions, and Mortgage Moratoriums.

At Sawin & Shea, LLC, we understand that hiring an attorney to help you file bankruptcy is scary. We are committed to providing compassionate and non-judgmental representation to all of our clients. Our attorneys have helped thousands of people just like you get the fresh start they deserve. We are here to help.

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This is a nightmare for a family that’s already struggling to make ends meet. Your unpaid bills are piling up and now your home is gone too.

Before you reach this point, an Indiana bankruptcy attorney can step in to help you keep your home and get your finances back on track. Here are the important things you should know about Indiana’s foreclosure laws.

How the Foreclosure Process Works in Indiana

If a mortgage lender determines that an Indiana homeowner is failing to make their mortgage payments, the lender will start contacting the borrower to demand payment. In this situation, you may receive phone calls, emails, and letters alerting you that you’re behind on your payments.

Soon, the lender will escalate the issue by filing a lawsuit through the courts. This allows them to begin the foreclosure process on your home, which will ultimately cause your home to be repossessed and sold at what is called a sheriff’s sale unless some type of intervention takes place. The Sheriff’s sale is done by bids at a set date and time. Anybody, including the mortgage bank can bid on the property. In fact, the mortgage bank can bid in all or part of the money judgement that they received in the foreclosure lawsuit. This is why most foreclosed homes become bank-owned properties that are then sold off to new buyers. In some circumstances, investments groups or individuals can buy the house at the sheriff’s sale. In the rare circumstance that the winning bid in a sale satisfies the bank’s money judgement and provides a surplus of funds, that surplus goes to the debtor.

How Will I Know I’m Facing Foreclosure?

Although this is a stressful and intimidating situation, you have foreclosure rights that are protected by Indiana and federal laws. There’s also a specific process lenders must follow to stay in compliance with the law.

After a period of non-payment, your mortgage lender should notify you of your status and options in writing. This is known as foreclosure loss mitigation notification and it describes things you can do to prevent losing your home.

The terms of your mortgage should also include a provision that the lender will send a notice of nonpayment when the loan is in default. If you receive any type of letter or warning that you’re approaching the point of default or foreclosure, don’t ignore it. This is your opportunity to take quick action to keep your home.

In most cases, you will have between 45 and 120 days of notification time before the foreclosure process officially begins. Federal law usually requires the lender to wait until the loan is 120 days past due. Indiana law requires lenders to send homeowners a pre-foreclosure notice by certified mail at least 30 days before filing the foreclosure suit.

However, it’s risky to just wait and hope you won’t lose your home. There are exceptions to foreclosure waiting periods that sometimes allow mortgage lenders to proceed fairly quickly.

If the process goes too far too fast, you could be barred from keeping your home. Unlike some states, Indiana doesn’t allow a foreclosed homeowner to reclaim a home after the foreclosure sale.

What Can I Do to Stop a Foreclosure?

There are routes to stopping foreclosure and staying in your home. Pursuing these options takes skillful financial and legal strategizing, so please seek the assistance of an experienced Indiana foreclosure attorney to assist you.

One option is arranging a foreclosure settlement directly with the mortgage lender. They might be willing to take a partial payment or set up a payment plan that prevents foreclosure and allows you to catch up.

Of course, not all lenders are willing to make these types of arrangements and they might feel that the foreclosure process is already too far along. Your lender could proceed with the foreclosure despite your pleas.

Bankruptcy is another way of halting creditor demands for payment. If you file for bankruptcy, this temporarily stops foreclosure and buys you some time. Federal bankruptcy law includes something known as the automatic stay, which stops creditors from continuing action against you during the bankruptcy period.

If you’re assuming bankruptcy always causes people to lose their homes, think again! In Indiana, bankruptcy can allow you to use a homestead exemption to protect your home and keep your family’s life stable while you get your finances in order.

When You’re Facing Foreclosure, We Can Help

Before foreclosure becomes inevitable, please reach out to the team at Sawin & Shea. We can help you save your home and improve your financial picture. We offer a free video consultation to get you on the road to financial recovery as soon as possible.

Sawin & Shea — Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process.

Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.

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