Legal Defenses to Foreclosure

Summary:  If you have a reasonable chance of making your mortgage payments, then you should be able to defend and stop the foreclosure. Or delay it until you can do a work-out or bankruptcy to reduce your monthly payments. You may have legal defenses to the entire foreclosure process.

In Colorado, You Often Have Legal Defenses to Foreclosure

Your defenses to a foreclosure and your options to avoid a foreclosure with a workout depend on your specific facts and circumstances.

The best option for you should be based on a legal analysis of the law, your legal defenses and options. Get the advice of a competent attorney who will study your particular facts and circumstances.

The course which your lender chooses also depends in part on your legal defenses and options.

The better legal position you have, the better response you are likely to get from a lender.

Delay Your Foreclosure to AnalyzeYour Legal Defenses In Colorado

Foreclosure moves quickly. The sale is scheduled to be held about 110 days after the Trustee records the Notice of Election and Demand for Sale, unless the lender grants a delay.

Your lender may delay the foreclosure sale if you can propose a good faith workout proposal. To do so, your budget must be able to support a workout solution. However, the closer you come to the foreclosure sale, the less likely that the lender will delay the sale.

Or, if you have a substantial amount of equity in your property, the lender may delay the sale to give you time to sell the property. Since the lender is likely to be fully paid, the lender it taking little or no risk in allowing the delay.

A chapter 7 bankruptcy will provide a temporary delay and it might be your best solution. However, a chapter 7 bankruptcy gives the control of your home and other nonexempt assets to the bankruptcy trustee.   In most cases, a chapter 7 will not help you. But it might. However, you cannot file a chapter 7 solely to delay a foreclosure sale.

A good solution for many homeowners is a chapter 13 bankruptcy because it gives you time to catch up on your back payments and pay other bills based on your ability to pay.

Stop Your Foreclosure Sale

You can stop the sale if you can get caught up with (cure) your overdue payments, interest, and lender legal fees. Or if the lender agrees in order to process a workout. Or if you take either a Chapter 7 or a Chapter 13 bankruptcy. Chapter 7 or a Chapter 13 Bankruptcy Should Stop a Foreclosure Permanently if You Can Make Payments.

Either a Chapter 7 or a Chapter 13 filing will stop the foreclosure process. At least temporarily.

If you can file a Chapter 7, then you can eliminate all of your unsecured debt and turn in a car to eliminate those monthly payments. (But you have to be able to get current on your mortgage.)

In Chapter 13, you can cure your default in installment payment over a time period of 3 to 5 years, depending on your circumstances. Upon filing a Chapter 13, the automatic stay will stop creditor actions against you and your property.

However, if you have had other filings dismissed within the past year, your automatic stay may not apply or it may apply for only 30 days, unless the court agrees to extend it. Usually if you have proposed a chapter 13 plan to the court for the payment of the mortgage arrears and other creditors based on your ability to pay, then the court will usually not allow the foreclosure to continue.

If you find that you need to sell your home and you have equity in it, then a chapter 13 filing may allow you to get court approval to sell your home, particularly if you also pay a portion of your unsecured creditors. The court will have to issue an order authorizing the sale once a buyer is found so that a title company can close the sale.

Stop Your Foreclosure Sale Using Legal Defenses

You may be able to permanently get rid of the foreclosure by using any legal defenses you may have. Such as Truth in Lending violations regarding a refinance, or the failure of your servicer to follow the loss mitigation techniques of FHA, Fannie Mae, or Freddie Mac.

Lenders No Longer Have to Produce the Note or Assignment in Colorado

In 2009, Colorado law changed so that the lender can foreclosure without having to produce the promissory note or assignment of the loan.