If you default on your mortgage, Michigan foreclosure law allows your lender to auction your property and eventually throw you out of your home. If you are facing foreclosure, filing for Chapter 7 or Chapter 13 bankruptcy can slow down or even stop the foreclosure process as long as you file before the auction commences. If you wait until the auction begins, however, even filing for bankruptcy can’t save your home. If you have defaulted on your mortgage or are nearing default, it is critical that you retain the services of a seasoned foreclosure attorney to fight for you so that you can keep your home.
Michigan Foreclosure Procedures
In Michigan, you must remain delinquent on your mortgage payments for 60 to 90 days before foreclosure proceedings can be initiated. Even after your home is sold at a foreclosure auction, however, you can keep your property during Michigan’s statutory redemption period of six months to a year. During this period you may continue to live on the property, and you can keep your property by paying the auction price plus enforcement costs.
The Bankruptcy Option
Filing for bankruptcy can help you delay or prevent the loss of your home through foreclosure. If you file for bankruptcy, the court will issue an automatic stay that temporarily prevents your mortgage lender from initiating or completing foreclosure proceedings. Your housing lender can still foreclose with permission from the bankruptcy court, but must attend a hearing to prove its right to foreclose.
The following are the two most popular types of bankruptcy that you might be eligible for:
- Chapter 7 bankruptcy:
Chapter 7 is a “liquidation” bankruptcy. Under Chapter 7, your non-exempt property is liquidated to pay your unsecured creditors. If you have no more than $37,775 in home equity in your primary residence (as of 2014), you can prevent your home from being sold to pay the debts you owe to holders of junior mortgages or to unsecured creditors. Although filing for Chapter 7 won’t directly prevent the holder of a first mortgage from eventually foreclosing, it can free up cash for you to get caught up on your first mortgage. If you can’t catch up on your first mortgage payments, however, Chapter 7 will only delay foreclosure and you may eventually lose your home. If your home equity exceeds $37,775, you can lose your home in Chapter 7 even if you do get caught up on your first mortgage, because your home can be sold to satisfy your debts to your other creditors. - Chapter 13 bankruptcy:
Chapter 13 is a “restructuring” bankruptcy. Under Chapter 13, you pay your debts under an installment payment plan approved by the bankruptcy court. This plan takes three to five years to complete, and it typically includes any mortgage payments that were overdue at the time you filed for Chapter 13. If it does include these amounts, your lender cannot foreclose on your home as long as you remain current on your payments under your Chapter 13 repayment plan. You can also strip holders of junior mortgages of their right to foreclose, so that they become unsecured creditors. For these reasons, Chapter 13 is usually the best bankruptcy option for debtors facing foreclosure.
Call Attorney Nancy Neal Joyce Today to Start on the Path of Financial Freedom
Attorney Nancy Neal Joyce enjoys decades of experience helping her clients head off foreclosure and enforce their rights once foreclosure proceedings begin. She will personally prepare all bankruptcy filings and vigorously represent you in bankruptcy court. Call her Livonia, Michigan office at (734) 427-7772 for a free initial consultation with her, and start protecting your legal rights today.
