Foreclosures & Evictions During COVID-19

The COVID-19 pandemic has brought on an unprecedented housing crisis.  According to the Mortgage Bankers Association’s Research Institute for Housing America, more than six million households did not make their mortgage or rent payments for September 2020.  These are staggering numbers.

At the time of this posting, there is a current residential eviction moratorium that runs through December 31, 2020 applicable to households under a certain income level.  This moratorium does not forgive missed rent payments; it only prevents actual eviction of qualified individuals and families.  This means at some point, the rent must be paid, and if it is not, landlords may seek actual eviction and other remedies.   Further, this only prevents actual evictions, not the legal process leading up to and including an order of eviction.  We have already seen a large number of eviction actions being filed in various Kentucky courts seeking an order of eviction that can be carried out when the eviction moratorium ends.

Mortgage payments are more complex.  Again, there is currently a foreclosure moratorium that runs through December 31, 2020 applicable to “FHA-insured single family properties, excluding legally vacant or abandoned properties.”  So, not all mortgages qualify, and like the eviction moratorium, it does not forgive or postpone missed payments unless further action is sought and approved, such as a forbearance.  Once a mortgage servicer has determined you have defaulted on the mortgage, it is likely to decline to accept any further payments other than a lump sum cure payment or even the entire amount owed.  This is simply not feasible for many families who are already struggling financially. 

If you are one of the many Americans that are struggling with missed rent or mortgage payments, we recommend that you first contact your mortgage servicer or landlord to explore any help that may be available, such as a mortgage forbearance.  If no options are available or these options are not feasible, you can contact us for help.

Chapter 13 bankruptcy is a very powerful and common tool to deal with evictions and foreclosures.  Under a chapter 13 bankruptcy plan, the past due amounts owed can be paid over an extended period of time up to 60 months while the regular rent or mortgage payment “restart fresh” and continue as normal.  For example, if your regular mortgage payment is $1,0000.00 per month and you are four months behind, the arrears would be paid over time based on your household budget.  The mortgage company or landlord would be required to accept the regular payment moving forward.  During the chapter 13 bankruptcy, eviction and foreclosure is forbidden to start and active evictions and foreclosures must stop.  So long as your plan is filed in good faith and you make the required payments moving forward, the court is extremely unlikely to allow an eviction or foreclosure to start or continue, even if asked by the landlord or mortgage company.

This is, of course, a simplification of the process, and further details and exceptions do apply.  If you or a family member are struggling during this financial crisis, give Peace Law a call to set up a free, confidential consultation with one of our knowledgeable attorneys.  We are currently offering consultations over the phone and can complete the entire bankruptcy process remotely using our secure online portal and electronic signature tools.  Even the one required court appearance is being completed over the phone or by Zoom, so no in-person contact is currently required. 

The sooner in the process you contact us, the more time and tools we have to help. 

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