As the mortgage crisis continues unabated, there are so many people who face foreclosure are also being forced into the option of bankruptcy. It has become apparent that a lot of homeowners who couldn’t make their house payments have been using their lines of credits and credit cards to get the cash that they need. Once the lines of credit and credit cards are maxed out, of course, these people find themselves in an even bigger fiscal mess. According to a recent survey, credit card debts are at an all-time high and, if this tendency goes on, our firm foresees that bankruptcy filings will continue to rise as they have over the last three years after the new bankruptcy laws were passed.
Lately, we’ve been seeing a lot of homeowners who are contemplating bankruptcy but are also in the process of trying to recieve a loan modification with their mortgage company because they have a foreclosure in the process. In fact, we work with numerous attorneys who offer loan modifications. The loan modification attorneys tell me the banks are escalating their foreclosure efforts and denying more loan modifications due to debt to income ratios. What this means is that if you owe a lot in other debts (such as credit cards, personal loans, etc.) besides your mortgage, the lender may view that even though your mortgage payments are lower after is your loan is modified, it would still be difficult or unimaginable for you to keep your home because you have other debt obligations that must be paid (and a lot of people in foreclosure are also behind on all their other debts so these debts are showing up as collection accounts on their credit report). In other words, the bank may be telling you that given your current debt load, you alone cannot afford to keep your home, and they would rather cut their losses and foreclose on your home because they are left with no other option. Bear in mind that banks do not like foreclosing on any home but will do so as a last resort.
Because of the monumental number of foreclosures that the banks are currently coping with, I find that a lot of lenders are slow as of late in initiating the foreclosure process even when the borrower is already several months behind. even so, in California, once a Notice of Default is filed against the property, the 90-day statutory period begins to run and the clock time starts ticking. Unless the foreclosure is stopped, by filing bankruptcy, or other legal means, the lender only needs to give 21 days’ notice (by sending the borrower another document called “Notice of Trustee Sale”) after the 90-day period in setting a sale date for the property being foreclosed on. Filing bankruptcy, Chapter 7 or Chapter 13, will immediately stop the sale from going forward, and the bank will need court permission to continue with the process if mortgage payments are not being made. An experienced and knowledgeable bankruptcy attorney can explicate to you how Chapter 7 or Chapter 13 may help you save your property or at least shelve the foreclosure sale so that you can look at all other possible options. In Chapter 13, it is also an option to “strip down” or remove your 2nd mortgage if the current market value is below the sum of the 1st mortgage.
Eliminating (or at least consolidating) your debts may better your debt-income ratio and this may be what your mortgage company wants to see when reviewing your application for a loan modification. Of course, this is just one of the factors that they take into account when evaluating your financial information. Just as important are your ability to show regular and stable employment as well as an assurance to the lender that whatever caused the financial adversity to start with is now over, so that you can afford your new mortgage payment once your loan has been approved to be modified.
If you are in foreclosure and are tired of the run-around from the bank or just need help understanding your options then you should speak to a bankruptcy attorney. The California real estate market is the “perfect storm” for homeowners to receive a principal reduction through bankruptcy. A bankruptcy lawyer can help people see if they qualify for a principal reduction through bankruptcy chapter 13 with motions like (11 U.S.C. ‘ 522(a)) to strip a lien. Making any errors when it comes to filing bankruptcy can be very costly, so be careful when selecting a bankruptcy attorney for a chapter 13. If you want help and have bankruptcy questions go to www.BankruptcyAttorneyinCalifornia.com.
Related posts:
- Bank of America Mortgage Modification: How You Can Protect Your Home From Foreclosure
- How a Wells Fargo Mortgage Modification Can Save Your Home From Foreclosure
- Ways To Avoid Swindles When Trying To Do Loan Modification
- Preventing Property foreclosure and Making use of Debt Consolidation for Credit Help
- Stop your Foreclosure Worries And Do Something about Them!