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July 28, 2017

Over the past several years, foreclosures have been a hot issue in the state of New Mexico. While the statistics may show that the total number of foreclosure sales have dropped, the fact still remains that thousands of families across the state are facing losing their homes in a foreclosure action. There are plenty of companies out there that will tell you that they can help you save your home from a foreclosure action. Even your own mortgage company, who has initiated the foreclosure action, may be telling you that they can modify your loan to save your home.

The fact is that companies that you pay to negotiate a modification or a deal with your mortgage company to save your home can’t guarantee results; and will keep the money you paid them even if they don’t save your home.

Even worse, mortgage companies take advantage of their own customers by offering to modify their loans to take them out of foreclosure. The mortgage company accepts money and places customers in a “trial period” during which the customer pays what is supposed to be the modified payment amount. After the “trial period” is over, the mortgage company is not required to modify the loan and often times they don’t. They foreclose on the home anyway even though their customer made the agreed upon payments.

These companies and your own mortgage company can’t or won’t guarantee that they will save your home from a foreclosure action and will take your money whether or not they save it for you. Are there any guarantees? Yes! There are two guaranteed ways to save your home.

The first guarantee is to pay back all of the arrears on your mortgage, late fees, attorney fees and costs associated with the foreclosure action. For those of us who don’t have a rich uncle who is going to lend us that kind of money, this is not a very feasible solution.

The other guarantee is available to most of the rest of us. A successfully completed chapter 13 bankruptcy will save your home from a foreclosure action. So, how does it work?

As soon as you file your chapter 13 case, an automatic stay goes into place. The automatic stay protects your home from the foreclosure action and prevents the public trustee from conducting the foreclosure sale. Chapter 13 bankruptcy allows you to pay back what you can with a payment that you can afford. This payment is made monthly over a period of three to five years. In order to save your home, the arrears on your mortgage must be included in your payment. The arrears on your home have to be paid in full, along with some other debts (including but not limited to, some taxes and domestic support obligation arrears). Most debts, such as medical bills and credit cards, are not required to be paid in full (the amount paid to them is determined by your income and living expenses). Anything remaining on these debts after the chapter 13 has been paid in full will be discharged (forgiven). So long as you remain current on your payments after filing, your home will be protected by an automatic stay. Once the arrears on your home are paid in full, your home will be saved from the foreclosure action.