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Fighting Foreclosure


In the beginning of the foreclosure process, homeowners can still save money, their credit or their house if they act quickly. Even when declaring bankruptcy, avoiding a foreclosure on your credit report can salvage your ability to rebuild credit and buy another house, which makes the struggle against a possible foreclosure well worthwhile.

What You can Do When Foreclosure is Iminent

Sell the property.
Work out a deal.
File Chapter 7 bankruptcy.
File Chapter 13 bankruptcy.
Short sale/deed in lieu of foreclosure.
Walk away from the house.
Look For a Legal Loophole

1. Sell the property: If you can find a buyer before the house is auctioned, you can sell it and keep whatever equity still exists.

2. Work out a deal: Your lender may be willing to work with you, rather than lose money at a foreclosure sale.

3. File Chapter 7 bankruptcy: If you can't get caught up in time, you will not be able to keep the house -- but you'll generally be able to delay the foreclosure sale a month or even several months. Any remaining debt to the lender will be wiped out.

4. File Chapter 13 bankruptcy: If you can afford to make the future mortgage payments and the delinquent payments, too, file Chapter 13 bankruptcy. This is different than Chapter 7, in which assets are liquidated but debts are wiped clean. With Chapter 13, you keep your assets and, under court supervision, you repay your debts under a three-to-five-year plan.

Short sale/deed in lieu of foreclosure: A short sale takes place when the bank allows you to sell your property even though their mortgage won't be paid. Be careful -- the bank may allow the sale to go through, but only on the condition that you repay the deficiency. In a deed in lieu of foreclosure, the property is signed over to the bank in exchange for the bank giving up its rights against you. Why might a bank agree to either of these? Lenders spend $30,000 or more to foreclose on a property. Most lenders will consider these options to avoid foreclosure costs.

6. Walk away from the house: Pack your things and leave. The only issue remaining is whether your lender can sue you for any deficiency still owed after the sale. In Ohio a Lender may look to other assets to remedy a deficiency. Ohio provides a Statute of Limitations of 2 years for a Lender to attempt to obtain a deficiency judgment. This doies not appear to happen with any great frequency since most people in foreclosure have few assets to protect. It is wise to seek help from an attorney if this is a concern.

7. Foreclosue is a legal process that requires Lenders to have certain status and to follow prescribed processes. Any deficiency in status, or violation of procedural requirements could derail a foreclosure proceeding. In some cases the homeowner may be able to receive compensation for the Lenders violation of state and federal consumer and credit protection statutes. Your best bet is to consult with an attorney to determine whether the Lender has committed a violation which will render the foreclosure proceeding void.

Law offices Jacob M. Rzepka 5035 Mayfield Rd. Lyndhurst, Ohio 44236 (216)-923-1309
Hours By Appointment - Evening and Weekend Appointment Available

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