In Kansas, a home foreclosure is a process started by a mortgage lender usually when a homeowner is three months behind in payments on the mortgaged debt. The lender then files a lawsuit in the county where the homeowner lives and then serves the homeowner with that lawsuit. While this process is often difficult and stressful, it is not impossible to overcome. Here is everything you need to know about home foreclosures in Kansas.
The Kansas Foreclosure Process
The homeowner has 20 days after being served with the lawsuit to file a written answer in district court where the lawsuit was filed. If no written answer is given within the 20-day window, the lender is awarded a default judgment of foreclosure. Then a sheriff’s sale of the home is scheduled in about 30 days to publically auction the property.
Stopping a Foreclosure
To slow or stop the process, a homeowner can give the aforementioned written answer to the court or file for Chapter 7 or Chapter 13 bankruptcy. The bankruptcy must be filed before the sheriff’s sale takes place and then puts a stay order to halt any collection activity – including the sale of the home.
The foreclosure process can also be stopped by the homeowner reinstating the mortgage, meaning the homeowner must bring the mortgage debt current – including any late fees, attorney fees and any other costs incurred by the lender during the foreclosure process. A homeowner filing for bankruptcy can arrange to pay this amount over a three to five year period along with current mortgage payments though a Chapter 13 Bankruptcy. A Chapter 7 Bankruptcy requires a reaffirmation agreement to the mortgage amount.
The Sheriff’s Sale
If the sheriff’s sale goes forward, it is held at the courthouse on the appointed date. The property will then be sold to the highest bidder – generally the mortgage company who is owed the first mortgage may begin bidding with the amount owed on the mortgage. It is important to remember that if the house is sold for less than the mortgage – a deficiency will result – and, the homeowner will be responsible for the difference.
Any other buyer may outbid the first mortgage company – including a mortgage company owed for a second mortgage, but this is uncommon because due to the foreclosure the resale value of the home is usually around 60-80% of the home’s pre-foreclosure value. Any buyer outbidding the first mortgage company’s bid of the amount owed would likely take a loss when the home is sold.
Transferring Ownership of the Home
The homeowner may stay in the home for up to 90 days following the sheriff’s sale. The homeowner then has the right of redemption, meaning if the homeowner can pay the full amount of the winning bid at the sheriff’s sale in cash within the 90 days, the sale is voided and the homeowner then keeps the house. If the full amount, plus costs and interest, isn’t paid by the 91st day, the homeowner must vacate the house and ownership is transferred to the winner of the sheriff’s sale.
If the homeowner remains in the house after 90 days, an eviction action is taken which results in additional fees. If the homeowner vacates the house in a timely manner, the mortgage amount owed on the home is paid to the mortgage lender owed (usually paid to themselves) and the now former homeowner no longer owes the lender. If a second mortgage was taken on the home, that debt remains in full assuming the second mortgage lender did not win the sheriff’s sale. The second mortgage lender then becomes an unsecured creditor and must seek a judgment to obtain the money owed.
The best advice for homeowners facing a foreclosure is – Be proactive! Stay in contact with your lender throughout the process. Take the steps you need to take in order to slow or halt the process altogether so you can stay in your home.
At the first sign you know you are going to be behind on your mortgage payments, contact your lender and explain your situation. You may be able to work out an agreement that is mutually beneficial for both parties before the legal process begins. Doing nothing assures that the long and stressful process of foreclosure will happen and you will have little to no room to negotiate saving your home.
If you do go through a foreclosure it will stay on your credit record for a maximum of seven years, but during that time you can still build your credit back up by paying your debts on time and thereby gradually reestablishing your credit rating.
If you have any questions about foreclosures or bankruptcy, call our offices to schedule a consultation at 1-800-894-5931 today.
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