To most residents of South Florida, two words that indicate an oncoming financial nightmare are bankruptcy and foreclosure. Homeowners here, where a national spotlight is constantly displaying South Florida as the epicenter of the fiscal health of the country, especially when it comes to real estate, the word foreclosure is the financial equivalent of the death penalty. Bankruptcy too is most often considered a thing to avoid at all costs, even when that cost is the removal of a person from the home they have put years of effort and money into. But, in many cases, foreclosure and bankruptcy can provide an opportunity to homeowners and investors who are familiar with the foreclosure and bankruptcy process and laws to protect their homes or discover real estate investments not available outside of the world of bankruptcy.
The average homeowner who believes that a foreclosure will soon be forced upon them by the bank can benefit greatly from understanding how bankruptcy can stop the foreclosure process in its tracks, giving them time to either work out with the bank a plan to become current with their mortgage or to sell the property at terms much better than without the protection of the bankruptcy code. While the foreclosure action is frozen in court, by virtue of the automatic stay of any actions against the homeowner or their property provided by the Bankruptcy Code of the United States, homeowners get the breathing room necessary to establish a communication with their creditors to come up with terms that include staying in their property and negotiating a lower monthly payment. Even if keeping the property is not an option, any deficiency created by the foreclosure sale, when the property is sold for less than the remaining balance on the mortgage, is discharged like any other debt through the bankruptcy, meaning the homeowner won’t be on the hook for hundred of thousands of dollars.
Bankruptcy also provides a benefit to those not in financial distress and looking to invest in real estate. Bankruptcy trustees try to find buyers for properties under their control every day and here too the bankruptcy code provides ample benefits not generally available without the Bankruptcy Code’s terms. Bankruptcy Trustees can sell residential and commercial real estate free and clear of existing liens and their huge caseload means they are usually more than happy when they find a buyer interested in one of their properties.
I have worked in the real estate market for decades, specifically within the world of bankruptcy auctions and foreclosures auctions and I highly recommend to all homeowners to hire a bankruptcy attorney or a foreclosure defense attorney in their area to utilize their rights within the law on how to make a confusing process work out for their best interests