INDIANA BANKRUPTCY AND FORECLOSURES FAQ
If you are considering filing for bankruptcy and a foreclosure pending in Indiana, you will no doubt have many questions. Bankruptcy and foreclosures can be very confusing, and you may wonder if it is the right option for you. Although looking online is a great place to start searching for answers to your bankruptcy questions, there is no substitute to consulting with an attorney who can answer your specific questions that are applicable in your particular situation.
Indiana Attorney Answers Frequently Asked Bankruptcy/Foreclosure Questions
Contact the law firm of Steven P. Taylor, P.C. at (317) 271-1111 for a consultation about the questions or concerns you have about bankruptcy. Attorney Steven P. Taylor is knowledgeable and experienced with Indiana’s bankruptcy laws, and will answer your questions and help you decide if filing for bankruptcy is right for you. Call Steven P. Taylor today if you have questions or concerns about bankruptcy throughout the areas of Central Indiana.
Indiana Bankruptcy Frequently Asked Question Topics
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I am three months behind on my mortgage payments and my lender is threatening foreclosure. What exactly does this mean?
Foreclosure is a process by which the lender terminates your ownership of your real property. The lender will do this through a public foreclosure sale which will take place at a published place and time (usually at the local courthouse). Once the foreclosure sale has taken place, you no longer own the real property and you will have to vacate the property.
If your lender is threatening foreclosure, you are in significant default on your mortgage payments and you are in danger of losing your house. Once the lender formally starts the foreclosure process by filing a foreclosure lawsuit, you will have a limited time to resolve the problem or you will lose your house. The filing of a bankruptcy can stop a foreclosure sale, even if the foreclosure sale is only minutes away.
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How is a foreclosure started?
A foreclosure is initiated by the lender filing a foreclosure lawsuit in the county where the real property is located. The lawsuit will be served upon the borrower and the occupants of the real property. The lawsuit will come with a Summons that will state that you have a twenty (20) days from receipt (can be 23 days) to respond to the foreclosure lawsuit.
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How long does a foreclosure take?
The sheriff sale must be a date that is at least 90 days from the date the lender filed the foreclosure lawsuit. In addition, the sale must also have been advertised in a paper of general circulation for three weeks. Recently, the deadlines have been extended for all practical purposes by judicial action that requires settlement conference if the borrower wishes to save the residence.
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How is the Sheriff Sale Conducted?
At the date, time and location for the sale, the Sheriff will put the property up for bid. Anyone can appear and bid on the property. The winning bidder, other than the lender, must pay cash at the time of the sale. The lender usually enters a bid equal to the amount owed by the lender. The lender buys the property for the amount of money the lender is owed on the property. This called a "credit bid," and it is the most common result at foreclosure sales.
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How do I stop a foreclosure sale?
There are only four ways to stop a foreclosure: (1) cure the default, also called "reinstating" the loan, (2) pay off the loan, (3) negotiate an extension with the lender, or (4) file for bankruptcy. Filing a bankruptcy is not something that should be done in a few minutes or hours before the foreclosure sale. It can be done but should not be done except in a dire emergency. Filing for bankruptcy requires a listing of all of your assets and liabilities. Failure to properly prepare the bankruptcy petition may result dismissal of your case as well as loss of assets.
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How do I cure/reinstate the default?
Under Indiana law, the sheriff has to stop the sheriff sale if you pay the loan current at any time prior to the sale. The amount you would have to pay would be all missed payments, late charges, foreclosure fees and costs, and the lender's attorney's fees. You can request the exact cure amount from the lender or the lender’s attorney. If you do attempt to reinstate the loan, please be aware that certified funds are usually required.
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Can I negotiate with the lender?
Most major lenders have special departments with the authority and ability to stop a foreclosure sale, provided you can reach an agreement with them. Each lender has its own unique programs and methods for negotiating and settling, but you should be prepared that any settlement will usually require a lump sum payment toward the default and some arrangement to cure the remaining arrears. Be sure to get any agreement with the lender in writing! Agreements with a lender are not enforceable in Indiana unless they are in a writing signed by the lender.
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Can bankruptcy save my house?
As discussed elsewhere on the website, the Bankruptcy Code has a strong arm section called the "automatic stay” which will stop a foreclosure immediately (in most cases) upon the filing of a bankruptcy. The "automatic stay" applies in both Chapter 7 and Chapter 13 cases but may not apply if you previously filed bankruptcy. If you have prior bankruptcies, you need to see a lawyer right away to determine if a bankruptcy stay will arise in your case or not. A Chapter 7 will only provide temporary relief from a foreclosure, while a Chapter 13 bankruptcy will allow you to save the home by forcing the lender to accept a 3 to 5 year plan to cure the arrearage.
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If I can't afford my monthly payments, why should I file bankruptcy to save my house?
A good reason to file bankruptcy to stop a may be to protect your equity in your house. Let's assume that you owe Big Bank $125,000 on your mortgage, but you can no longer afford the monthly payment, and you aren't eligible for a refinance. Let's also assume that, if you had time to adequately prepare and market your house, you could sell it for $180,000. If you let the house go through foreclosure, you will get nothing from the sheriff sale. However, a Chapter 13 bankruptcy will grant you the necessary time to prepare and market your house for sale.
If you have more than one mortgage against your house, a foreclosure by the first lender will not relieve you of your obligations to a second mortgage and the second lender may still seek to collect payment from you. Even if you are going to let your property go to foreclosure, a bankruptcy may be necessary to discharge all debts associated with the house. Again, you should consult an attorney at the Law Office of Steven P. Taylor, P.C. to discuss the specific benefits of a bankruptcy for you.
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The lender just held a sheriff sale on my house. What do I do now?
Unfortunately, if the lender has already held the sheriff sale, you have run out of options. Ownership and title of the real property transferred from you to the new owner at the sale. You have to move out of the property.
Why should I meet with a Law Office of Steven P. Taylor, P.C. attorney?
There are many myths and misconceptions about bankruptcy. If you have financial problems, bankruptcy is an option that is available to you. In order to make the decision that is best for your situation, you should know as much as possible about bankruptcy so that you can make an informed decision. Contact the law firm of Steven P. Taylor, P.C. at (317) 271-1111 or 765-868-0807 for a free consultation to determine if bankruptcy is right for you or email me your questions. Attorney Steven P. Taylor’s practice is focused on consumer bankruptcy law and he possesses the knowledge and experience necessary to guide you through a successful bankruptcy filing
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