If you are faced with the prospect of reinstating your mortgage, this means that you have become far enough behind in monthly mortgage payments to warrant a referral by your mortgage company to an attorney to initiate foreclosure proceedings on your home. Or perhaps a foreclosure sale has already been scheduled on your home. Reinstating the loan means to come up with and pay the mortgage company a lump sum of money that represents the past due payments as well as the legal fees and costs associated with foreclosure sale. Often this lump sum amount is several thousands of dollars so you can see that reinstating a delinquent mortgage is not the easiest thing to accomplish.
Last fall I wrote a blog detailing how Teresa Guidice was due to be released from prison in December, 2015, but was facing foreclosure on her infamous home frequently spotlighted on the reality television show, The Real Housewives of New Jersey. The Guidices did not lose their home as they were able to reinstate their mortgage on the home prior to a foreclosure sale. With a monthly mortgage payment of $10,679.00, the reinstatement amount would have been significant. While most people do not have access to the funds a Bravo TV star does, there are ways to obtain the funds for reinstatement of a mortgage. One of the best ways is a hardship withdrawal from a 401K plan. If you have a 401K, it is likely the plan has a written policy that will allow for a hardship withdrawal from the plan prior to retirement. Potential loss of your home is frequently a justified reason for early withdrawal.
If Reinstatement is Not an Option
If reinstatement of the loan is not a viable alternative for you, Chapter 13 bankruptcy is another tool to fight foreclosure. The filing of a Chapter 13 would stop a Sheriff’s sale or a foreclosure sale from the courthouse steps by placing the amount need to “cure” or catch up the delinquent mortgage payment into a repayment plan. This Chapter 13 repayment plan would allow a homeowner to pay back the mortgage arrears over a three or five year repayment period, with the goal to exit the Chapter 13 plan completely current on the home mortgage. Also please remember a Chapter 13 bankruptcy must be filed before the foreclosure sale has taken place.
If you are having difficulty in keeping your home mortgage payments current yet want to keep your home, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation with one of our experienced, licensed attorneys.
Carla M. Handy is the Managing Partner of the Bond & Botes Law Offices in Gadsden and Anniston, Alabama. She holds a Bachelor of Arts from Auburn University, and a Juris Doctorate from the University of Alabama School of Law. She has been helping families navigate consumer bankruptcy cases since 1994.Read her full bio here.