Bankruptcy Lawyer
As the mortgage meltdown continues with no end in site, more and more people facing foreclosure are also being forced into the option of bankruptcy too. It appears that a lot of homeowners who couldn’t make their house payments have been tapping into their lines of credits and credit cards to get the cash that they need. Once the credit cards and the credit lines are at there limit, inevitably, 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 propensity continues, our firm predicts that bankruptcy filings will continue to rise as they have over the last three years since the new bankruptcy laws were passed.
Of late, we’ve been seeing many of homeowners who are considering bankruptcy but are also in the process of trying to get a loan modification with their lender due to the fact that they have a foreclosure in the process. In fact, we work with several attorneys who render loan modifications. The loan modification attorneys tell me the banks are amping up 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 bank may conceive that even although your mortgage payments are lower after is your loan is modified, it would still be difficult or unimaginable for you to keep your property because you have other outstanding debts 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 choice. Bear in mind that banks do not like foreclosing on any property 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 mortgage companies are slow as of late in initiating the foreclosure process even when the borrower is already several months delinquent. However, in California, once a Notice of Default is filed against the property, the 90-day statutory period begin s to run and the clock starts ticking. Unless the foreclosure is stopped, by filing bankruptcy, or other sound 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 explain to you how Chapter 7 or Chapter 13 may help you save your property or at least put off 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 total 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 considering your application for a loan modification. Of course, this is just one of the factors that they take into account when evaluating your financial info. 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 house payment once your loan is modified.
If you are in foreclosure and are exhausted from the run-around from the lender or just need help understanding your options then you should speak to a bankruptcy lawyer. 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 mistakes when it comes to filing bankruptcy can be very costly, so be heedful when selecting a bankruptcy attorney for a chapter 13. If you want help and have bankruptcy questions go to www.BankruptcyAttorneyinCalifornia.com.
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