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Homeowners get holiday break from foreclosures

Many Colorado residents are likely bracing for an increase in their household spending with the holiday season underway. Of course, for some, the increase in spending comes at an unwelcome time, when combined with a tight budget and seemingly neverending monthly bills.

Fortunately, it appears that the holiday spirit has caused some financial institutions to stop foreclosure, at least for the time being. Several large lenders and banks, including Freddie Mac, Fannie Mae and Bank of America, recently announced they would suspend bank repossessions during the Christmas holiday.

While the news is a welcome reprieve for many, it is only temporary; the companies will continue the evictions after the first of the year. Moreover, other pre- or post-foreclosure activities will not cease during the holidays, including filing notices of default and other legal proceedings. Additionally, other large lenders, such as Wells Fargo Bank and Citibank, have yet to announce whether they will follow suit as they have in the past.

Ultimately, the only way for some to stop foreclosure may be through filing for bankruptcy relief. When a consumer files for bankruptcy, an automatic stay goes into effect that halts collection activities against an individual. During the period of the stay, creditors typically may not contact debtors or commence lawsuits to collect debts.

Given the benefits of the stay, some may be able to use Chapter 13 to save their home from foreclosure. During the stay, the individual may be able to bring their past-due payments current. For those who can take advantage of bankruptcy protection, the holidays may indeed be a special time of year.

Source: CNN Money, "Fannie and Freddie halt foreclosures for the holidays," Les Christie, Dec. 3, 2012

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