We have compiled a few commonly asked questions and provided a response that should help you have a better understanding of foreclosure in Massachusetts. If you have any further questions, please feel free to contact one of our Massachusetts Bankruptcy attorneys.

General Foreclosure Questions:

Please note that nothing in this section should be considered legal advice nor does it create an attorney client relationship. Every situation is different and only an experienced, licensed attorney can advise you on your particular situation. Contact us today to speak with our Massachusetts bankruptcy attorneys today.

• How can a Chapter 13 bankruptcy save my home?

• When do I need to file a Chapter 13 bankruptcy petition to save my home?

• Can Bankruptcy lower my interest rate or lower my monthly payments on my home? 

• Can I file a Chapter 7 bankruptcy to save my home?

• What are the benefits of a Chapter 7 if I am facing a foreclosure? 

• I cannot afford my mortgage any longer and I am facing a foreclosure, what are my options?

• If I am behind on my mortgage, how long does it take a lender to foreclose my home?

• What is a deed in lieu of foreclosure?

• What is a short sale, and is it a good idea?

• Can I transfer my home to a friend or family member to avoid foreclosure?

• What will happen to the equity in my home after a foreclosure auction and sale?

• What will happen to my tenants after a foreclosure auction and sale?

• What will happen to me and my family if I lose my home through foreclosure?

ANSWERS

Q: How can a Chapter 13 bankruptcy save my home?

A: A Chapter 13 bankruptcy is filed, a provision of the bankruptcy code called the “automatic stay” will prohibit the lender from foreclosing the property. When a borrower files his Bankruptcy petition, he also files a Chapter 13 repayment plan. This repayment plan will allow the borrower to repay the arrears on his mortgage over 60 months. In addition to the monthly Chapter 13 payment, the debtor will also be responsible for making their regular monthly mortgage payments.  If you would like to set up a no obligation, free bankruptcy consultation, please click here, or call one of our experienced Massachusetts Bankruptcy attorneys at 617-497-5291. 

Please note that in order to file a Chapter 13 you must actually intend and have the ability to participate in a Chapter 13 plan.  The filing of a bankruptcy petition merely to stop foreclosure is considered by the U.S. Government as an abuse of the Bankruptcy Code. [top]

Q: When do I need to file a Chapter 13 bankruptcy petition to save my home?

A: We suggest that a Chapter 13 bankruptcy be filed at least 72 hours prior to any foreclosure auction, so that your bankruptcy attorney has time to compile the necessary information and notify the foreclosure law firm and its auctioneer of the bankruptcy filing.  However, Grantham & Associates has filed Chapter 13 bankruptcy petition the same day as a foreclosure auction, and have successfully stopped foreclosure auctions.  It is not recommended that you wait to the last minute, as you can still lose your home in a foreclosure auction.  If you are facing a foreclosure it is critical that you speak to one of our attorneys immediately.  To speak with a Boston Bankruptcy lawyer, please call (617) 497-5291. [top]

Q: Can Bankruptcy lower my interest rate or lower my monthly payments on my home? 

A: Absent special circumstances (such as fraud, mistake, duress, incapacity, or other legal claims that arise at the time of the issuance of the mortgage loan), a Chapter 13 bankruptcy cannot modify an existing loan or reduce your monthly payment on your primary residence.  You will be responsible for making your current monthly payment in addition to a monthly payment to the Chapter 13 trustee that will be applied to your outstanding arrearage.  

However, if the property that is being foreclosed is not your primary residence, there are options available that may allow you to reduce the amount of the loan, if the property is worth less than what is owed. Contact one of our Massachusetts Bankruptcy lawyers today, call (617) 497-5291. [top]

Q: Can I file a Chapter 7 bankruptcy to save my home?

A: If a mortgage is in default prior to the filing of a Chapter 7 bankruptcy petition, or goes into default after the filing of the bankruptcy petition, the mortgage lender can seek approval from the court and subsequently foreclose on the property.  A Chapter 7 will only delay the foreclosure for a short period.  Those persons filing a Chapter 7 who own real estate must be current on their mortgage prior to filing the petition; otherwise, they may lose their home.  A Chapter 7 for individuals or spouses facing foreclose is the best option is those persons wish to “surrender” or give the property back to the bank. For more information, contact one of our Massachusetts Bankruptcy lawyers today, call (617) 497-5291. [top]

Q: What are the benefits of a Chapter 7 if I am facing a foreclosure? 

A: At a foreclosure auction, It is highly likely that the lender will not sell the subject real estate at a foreclosure auction for the full value of the mortgage. If a property sells at a foreclosure auction for less than is owed on the mortgage, typically the borrower is responsible for the "deficiency." However discharge in a Chapter 7 bankruptcy will protect the debtor from the entry of a deficiency judgment. If our bankruptcy attorneys determine that a borrower cannot afford to keep their home, then we will advise that the property be surrendered in the bankruptcy. This will allow borrowers to truly get a "fresh start." for more information, contact one of our Boston Bankruptcy lawyers today, call (617) 497-5291. [top]

Q: I cannot afford my mortgage any longer and I am facing a foreclosure, what are my options?

A: If you cannot afford to make your regular monthly mortgage payment at all and have no expectation of being able to do so, you may consider either hiring an attorney to file a Chapter 7 bankruptcy or negotiate a deed in lieu of foreclosure.  If you cannot afford your monthly payment due to permanent reduction in pay, permanent disability, or an increase in monthly payment, you will not be a good candidate for a Chapter 13 and you should consider Chapter 7 Bankruptcy. However, this should be a decision that you make after consulting with one of our experienced bankruptcy attorneys. [top]

Q: If I am behind on my mortgage, how long does it take a lender to foreclose my home?

A: A lender first issues a demand and acceleration letter approximately after 3 -5 months of missed payments.  After this letter is issued, foreclosure proceedings will begin approximately 15 days later. In other words, a complaint to foreclose the mortgage will be filed in the Massachusetts Land Court.  It will take at least six weeks after this complaint is filed until a foreclosure auction occurs.  [top]

Q: What is a deed in lieu of foreclosure?

A: A deed in lieu of foreclosure transfers title to the subject property back to the bank instead of going through the foreclosure process.  This is a voluntary method of surrendering, or giving back the property to the bank.  A foreclosure is an involuntary method of forcibly taking title from you and selling that title to a third party.  A lender will not accept a deed in lieu of foreclosure if there is a second mortgage on the subject property. However, it is important to remember that if the property is worth less than the mortgage, and the lender forgives the balance of the mortgage; the difference is considered income, and the bank will issue a 1099 in which you will have to pay taxes on. To find out if this is a good option to you, contact one of our Massachusetts Bankruptcy lawyers today, call (617) 497-5291. [top]

Q: What is a short sale, and is it a good idea?

A: A short sale typically occurs when a real estate broker negotiates with a mortgage lender, whereby that entity agrees to accept a payoff of the mortgage for less than the actual outstanding balance due on the promissory note. In other words, the property will be listed and sold by a real estate broker, and the mortgage lender will accept less money than it is due while releasing the mortgage from the property. 

A short sale is generally an unfavorable method of disposing of a property.  It is more efficient and beneficial to a debtor to either execute a deed in lieu of foreclosure or file a Chapter 7 bankruptcy petition.  Typically, the only individual who benefits from a short sale is a real estate broker who collects a 5% commission on the sale of the property. The debtor does not receive any equity from the sale and the lender takes a loss on the loan.  Moreover, there may be tax consequences on the sale of the property. To discuss this option Contact one of our Massachusetts Bankruptcy lawyers today, call (617) 497-5291. [top]

Q: Can I transfer my home to a friend or family member to avoid foreclosure?

A: No, if you transfer the subject property to a third party, the lender will possess the same right to foreclose the property.  A mortgage remains attached to a property until is paid off and discharged no matter who takes title to the property.  [top]

Q: What will happen to the equity in my home after a foreclosure auction and sale?

A: Based on the fact that we are in a down real estate market and that there are a high number of properties currently in foreclosure, it is likely that your home will receive a few number of low bids at a foreclosure auction.  The bank may sell your property for low as 50% of the fair market value of the property.  The bank does not have an obligation to obtain the full fair market value of the property at the foreclosure auction.  This means that you are not guaranteed, and it is highly unlikely, that you will see any money payments to you after a foreclosure auction. Keep in mind that all mortgages and liens of records, attorney’s fees, auctioneer fees, and other costs are paid from the proceeds of a foreclosure sale. This leaves very little, if any, money coming back to you after the completion of the sale.  [top]

Q: What will happen to my tenants after a foreclosure auction and sale?

A: The individuals, entity, or bank who purchases the subject property at the foreclosure auction will likely evict the tenants.  The new owner of the property is not required to abide by the terms of the lease agreement that you executed with those tenants.  Most parties that purchase property at a foreclosure auction desire to evict all occupants rather than continue to lease the property to those persons.  [top]

Q: What will happen to me and my family if I lose my home through foreclosure?

A: If you live in the subject property after a foreclosure auction, complaint for eviction will be filed against you in a district court.  You may negotiate with the new owner of the property to provide you with time to pack, store, and move your personal belongings.  [top]

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At Grantham & Associates, P.C., we believe that you are entitled to know what you are paying for. Therefore, we offer a free one hour consultation with all of our new potential bankruptcy clients. This gives you an opportunity to meet, or speak with the attorney that will be working with you on your matter.