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5 Foreclosure Myths Debunked

Posted By Allmand Law Firm, PLLC || 5-Sep-2017

Although foreclosure rates are no longer at historical peaks as they have been in recent years, millions of homeowners across the nation still face the personal and financial challenges of foreclosure proceedings. This is true in Texas, where foreclosure activity across the state and the Dallas-Fort Worth area has increased in past two years. That leaves many homeowners struggling to find relief during tough financial times.

At Allmand Law Firm, PLLC, our Dallas bankruptcy lawyers assist clients explore all of their available options for debt relief and foreclosure defense, including bankruptcy. As we mentioned in a previous blog that debunked common bankruptcy myths, misconceptions and inaccurate information can severely compromise individuals and property owners who want to secure the financial fresh start they need. That’s why our legal team wanted to put together the following list of foreclosure myths and why they are simply untrue:

  1. Filing for bankruptcy stops a foreclosure. While bankruptcy may temporarily delay the foreclosure process - and provide the necessary time and funds to enact a defense strategy - it is not itself a strategy for completely stopping it. Other loss mitigation options may be available if you contact your mortgage servicer in a timely manner, including loan modifications. Depending on your circumstances, the automatic stay afforded by bankruptcy may also provide you with the time and funds to catch up on missed payments, or enact a repayment plan that fits the mortgage servicer's needs.
  2. You’re not responsible for paying the bank’s legal fees. This, unfortunately, is not the case. If you read the fine print of your mortgage agreement, you will find that you are in fact responsible for the bank’s legal fees in the event of a foreclosure.
  3. The bank really wants your home back. Foreclosure can be a time consuming process for banks, and is often used as a last resort. Most banks will do everything possible to work things out with a homeowner in order to avoid foreclosure, putting you in position to stay in your home when possible.
  4. Your involvement with the property is over once the bank takes it back. If the bank sells your home after foreclosure for less than what you owed on your mortgage, you will be held responsible for paying the difference, or “deficiency.” Furthermore, the bank can collect interest on that amount. A chapter 7 bankruptcy or deed in lieu of foreclosure may clear you of owing a deficiency, so contact Allmand Law Firm, PLLC to speak with a bankruptcy attorney to talk about your options.
  5. Even if I pull together the money to stop a foreclosure, there is no way to stop it. Most states, including Texas, have laws that require foreclosure proceedings to be stopped if the homeowner has the money to cover all missed mortgage payments, late fees, and legal fees owed. The lender or servicer is required by law to send the borrower a notice of default and intent to accelerate, which gives the homeowner at least 20 days to cure the default before notice of sale can be given.

If you are behind on your mortgage payments or are currently facing foreclosure, you have options. We invite you to contact Allmand Law Firm, PLLC to discuss your unique case and obtain advice tailored to your situation. When you choose to work with our firm, we may be able to put a stop to foreclosure proceedings, protect your credit history, protect you against potential tax obligations, and more.

Case evaluations are provided free of charge. Allmand Law Firm, PLLC serves Texas clients from two office locations in Dallas and Fort Worth.

Categories: Foreclosures
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