Federal Moratorium on Mortgage Foreclosure & Evictions
When the COVID-19 pandemic hit the US last year, the CDC issued federal moratorium on mortgage foreclosure and evictions. The idea behind the CDC’s action was to prevent a spread of the virus if millions of people were going to be evicted from their homes and potentially homeless, including many area Kansas City residents. Note that unlike many other states, Kansas is a “Judicial Foreclosure,” state which means the lender must file a lawsuit and obtain Court permission before holding a foreclosure sale – which is a slower process compared to other other states, such as Missouri.
Kansas Judge Finds Moratorium Unenforceable
At this time different parts of the country are trending in different directions with eviction and foreclosure cases, but the moratorium is still in place. However a Johnson County, Kansas judge recently ruled that the moratorium is unenforceable. The foreclosure moratorium is schedule expires at the end of June 2021, but it could have been (and might still be) renewed and extended. However, the moratorium won’t do much good if Kansas judges won’t enforce or abide by it.
Kansas Homeowners
To the extent local Kansas judges are planning to allow evictions foreclosures to resume, the most likely outcome for many Kansas homeowners will be to file a Chapter 13 bankruptcy. Some homeowners might turn to Individual Chapter 11 “business” bankruptcy, farmers may file a Chapter 12 bankruptcy, but the vast majority of Kansas residents behind on their mortgage will use a Chapter 13 bankruptcy’s Stay to stop the foreclosure and seek repayment of the debt over time while trying to pursue a mortgage loan modification.
Kansas Renters
The situation with rental defaults and evictions is a little more difficult. It’s challenging in both Chapter 7 and 13 bankruptcy to halt an eviction judgment once a judgment is granted. However, it is possible to seek a stay to stop the proceedings before a judgment to evict is entered, so the best decision for most will be to seek bankruptcy counsel if property management companies and landlords refuse to make arrangements.
WM Law is Here to Help – 1-855-Don’t Worry
The slowly recovering US economy may take a further nosedive if millions of people are displaced from their homes. It is possible that some other solution, from Congress, or the states, might help tenants and homeowners who are still unemployed or underemployed from the pandemic. But until then, Kansas City renters and homeowners and renters who are behind on payments should contact WM Law quickly (913-422-0909) to discuss what options might be available and develop a plan of action.