Albuquerque / New Mexico Bankruptcy Law | Law Office of Jonathan M. Peake, LLC
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FORECLOSURE IN NEW MEXICO

How Bankruptcy May Prevent Foreclosure or Limit the Negative Effects


  Foreclosure is the process where a lender attempts to recover the balance of a loan by taking the property back and selling it at auction. During any pay period that a lender is not receiving payment, this will be reported to the consumer’s credit report. When the payments have fallen far behind enough, the lender will file a lawsuit in court to recover the property.


If the lender successfully regains the property through foreclosure, a sale will be made, often within a smaller time window, to a much smaller number of eligible bidders due to the auction’s restrictions on available funds. If the property sells for less than what was owed on it, the former-owner is still responsible for the deficiency amount, even though they no longer own the property!


This  outcome of a short-sale may be similar to a foreclosure in the fact that a person’s credit rating will take a significantly hit, the property will be taken from them, and the consumer will often be left owing a debt on a property that they no longer own.


Bankruptcy stops any foreclosure proceeding. It gives the power back to the consumer to be able to make decisions regarding the residence. The consumer may release the property and not be responsible for any deficiency amount, they may catch back up the payments through a structured plan, or keep the residence outright and any equity they may have in it.





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GENERAL INFORMATION