Several years after the housing bubble burst, Americans are still facing an astounding number of home foreclosures. Nationwide, more than 1.3 million homes are currently in foreclosure. Millions more have already been lost.
A key reality of the continued housing crisis is that foreclosures are taking longer than ever to process. It now takes, on average, about 22 months for a foreclosure to move from start to finish. Usually, homeowners get to stay in their homes during this time.
Much of the delay can be attributed to fallout from the robo-signing scandal that rocked the banking industry in 2011 and 2010. Millions of foreclosures were put on hold after it was revealed that banks were processing foreclosure paperwork without properly verifying the information contained therein. As a result, many homeowners were wrongly foreclosed upon, forced to pay impermissible fees and penalties or caused to suffer other types of financial harm.
Bankruptcy Can Stop Foreclosure
This long foreclosure-processing period gives homeowners a chance to explore ways to avoid being foreclosed upon. Many don't realize that filing for bankruptcy can actually stop foreclosure.
Filing for bankruptcy puts all foreclosure proceedings on hold. However, the ultimate outcome depends on what type of bankruptcy is secured.
In Chapter 13 bankruptcy, the homeowner works out a payment plan to pay off the outstanding mortgage balance. This allows them to keep their home, so long as they are able keep up with their current payments. Chapter 13 is usually reserved for homeowners with a steady source of income.
Alternatively, Chapter 7 filers can have their debts liquidated by the bankruptcy court. Although discharging the mortgage debt will likely mean giving up the home, it may still be more favorable than going through foreclosure.
Minnesota Foreclosure Statistics
It is likely that the foreclosure problem in Minnesota will not stop any time soon. Statewide, approximately one out of every 889 homes was in foreclosure in December 2011. However, the problem was much more pronounced in the Twin Cities metro area. For example, one out of every 503 homes in Hennepin County was in foreclosure. In Anoka County, the rate was one out of every 354.
If you are a Minnesota homeowner facing foreclosure, know that you have options. Contact a bankruptcy attorney who can help figure out the best resolution to your financial problems.