Reinstating Your Mortgage in Colorado
The first option you have when facing foreclosure in Colorado is to reinstate the mortgage. Reinstating the mortgage means that you catch up on your missed payments plus fees and costs.
To do this, you must file a written Notice of Intent to Cure with the trustee no later than 15 days before the sale of your home. Then, you must pay the total amount due before noon on the day of the sale. It is vital that you do not miss this deadline because in Colorado, you have no right to repurchase (redeem) your home after foreclosure.
Exploring Bankruptcy Options for Foreclosure Defense
If you are unable to reinstate the mortgage, filing for Chapter 13 bankruptcy is an excellent option to consider. When you file for bankruptcy, an automatic stay goes into place, which stops all collection efforts, including foreclosure. After the foreclosure is stopped, a court-ordered payment plan will be put in place. You will usually have between three and five years to catch up on missed payments.
If you are underwater on a second mortgage (it is valued at less than you owe on it), the second mortgage can be considered an unsecured loan. This means that the loan will be discharged as long as you complete your debt repayment plan.
If you are not eligible to file for Chapter 13 bankruptcy, filing Chapter 7 bankruptcy is another possibility. In a Chapter 7 bankruptcy, you would surrender the home and the mortgage would be discharged.
Understanding Loss Mitigation Strategies
The third option you have when facing foreclosure is loss mitigation. Loss mitigation is when your lender works with you to avoid foreclosure.
A few of the more popular ways that your lender could help you avoid foreclosure are:
- Loan modification. Your lender could make changes to your current mortgage either by reducing your principal, reducing the interest rate, extending the term, or reducing the monthly payment. When exploring loan modification, you should be aware of people trying to prey on your situation. There is a high risk of fraud, and you should never sign over your deed to an individual ensuring they will modify your loan.
- Repayment plans. Your lender could create a repayment plan through which you repay a part of your delinquency in monthly installments.
- Forbearance agreements. If you are temporarily unable to make mortgage payments, your lender can agree to suspend payments for a limited amount of time until you can begin a repayment schedule. A lender will only agree to a forbearance agreement if you can resume payments at a specific date in the future.
- Short sales. In a short sale, the bank agrees to sell the property for less than what you owe. Short sales are beneficial because you can walk away without a foreclosure on your credit report. You may be held responsible for the difference between the amount received from the sale and the amount due.
- Deed-in-lieu. You can sign over the deed of the property to the lender, and in exchange, the lender releases you from all liability. As with the short sale, you may have to pay the difference between the value of the property and the amount due. Deed-in-lieu is only an option if there are no liens on the property.
In Colorado, there is no “dual tracking,” meaning, if you are pursuing loss mitigation, the servicer cannot continue with the foreclosure action. The trustee can halt a foreclosure sale when the borrower has either submitted a complete loss mitigation application or has been offered and has accepted a loss mitigation option and is complying with its provisions.
The foreclosure sale cannot proceed until:
- The lender notifies you that you are not eligible for any loss mitigation options
- You reject all loss mitigation offers
- You fail to comply with the terms of a loss mitigation option
Get Legal Help from a Fort Collins Foreclosure Defense Attorney
You should contact an attorney as soon as you start falling behind on mortgage payments. Don’t wait until it is too late to reach out. I would be happy to review your situation and advise you appropriately. Together, we can decide what is best for you and your family.
Call Levi A. Brooks, Attorney at Law at (970) 293-8371 now for a free consultation.
Commonly Asked Questions
How can bankruptcy help with foreclosure defense in Colorado?
Filing for bankruptcy can be a powerful tool in defending against foreclosure in Colorado. When you file for Chapter 13 bankruptcy, an automatic stay is put in place, halting all collection efforts, including foreclosure proceedings. This gives you time to create a court-approved repayment plan, allowing you to catch up on missed mortgage payments. If you're not eligible for Chapter 13, Chapter 7 bankruptcy may allow you to discharge your mortgage debt, although it typically involves surrendering the home. Consulting with a knowledgeable attorney can help you determine the best course of action.
Why should I hire a foreclosure protection attorney in Fort Collins?
Hiring a foreclosure protection attorney in Fort Collins can significantly enhance your chances of successfully defending against foreclosure. An attorney can provide personalized legal advice tailored to your unique circumstances, helping you understand your rights and options. They can assist in negotiating with lenders for loss mitigation options, guide you through bankruptcy proceedings if necessary, and make sure that all legal deadlines are met. With their knowledge of Colorado's foreclosure laws, an attorney can help you navigate the complexities of the process, ultimately working to protect your home and financial well-being.
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