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Home foreclosure and personal bankruptcy

On Behalf of | May 3, 2023 | Foreclosures

It has been a long time since anyone described Miami real estate as “cheap.” However, in recent years, many people were able to purchase homes in the Miami area because of cheap credit.

Because interest rates were low, many families could take out loans to purchase homes. But, over the past couple years, things have changed. Inflation started to rise, meaning that these homeowners had a harder time meeting all their expenses and paying their mortgage bills.

In an effort to tamp down this inflation, the Federal Reserve has been raising interest rates. Private lenders have followed suit.

This has had a number of consequences. For one, it has cooled the housing market, since it’s harder for buyers to secure loans. That’s bad for sellers. And for some homeowners, it has been disastrous.

Some homeowners have adjustable-rate mortgages, in which the mortgage rate goes up when interest rates go up. As a result of the recent rate hikes, they may have to pay more than they bargained for. In some particularly bad situations, they are now facing the possibility of foreclosure.

Foreclosure defense

There are a number of strategies for defending against home foreclosure. Sometimes, a borrower can stop foreclosure by negotiating terms with the lender. Many lenders would rather do this than foreclose on a home, especially at a time when the market is slow.

In other cases, borrowers may need to take more extensive measures, such as filing for personal bankruptcy.

Bankruptcy and foreclosure

If you file for bankruptcy, it doesn’t necessarily mean you will get to keep your home. However, it can slow down the foreclosure process.

One of the most important features of filing for bankruptcy is that doing so puts a hold on creditors’ efforts to collect on their debts. When you file for bankruptcy protection, the court issues a stay — an order instructing your creditors to cease trying to get you to pay them, and to go through the courts.

This doesn’t mean you won’t have to eventually pay the mortgage, but it can give you time to reorganize your finances and work out a way to keep your home.


Kingcade & Garcia | A Miami Law Firm