There are many ways ordinary hardworking homeowners face the real possibility of losing their home.
Here is a very typical situation: A homeowner gets into financial difficulty and wants to do a loan modification to make the mortgage payments more affordable. So the borrower contacts the bank and explains his or her financial situation and requests a lower mortgage payment. The mortgage company or the bank in turn requests the borrower to forward documents to determine program eligibility. Here comes the frustrating part. The mortgage company is not organized and takes months to review the forwarded documents.
It is not uncommon for the relevant documents to be misplaced. Meanwhile the borrower keeps on missing mortgage payments and back mortgage payments keep on growing.
At some point, the mortgage company starts the foreclosure process. Now, the homeowner’s home is in the foreclosure process and the homeowner is still waiting to see if his or her loan modification will be approved. When the foreclosure process is initiated, the homeowner must be very careful! It is not uncommon for mortgage companies to foreclose when a loan modification application is pending. At some point before foreclosure takes place, the homeowner MUST take action to protect his or her property. You just can’t sit and wait for the mortgage company to decide if a loan modification will be approved. Filing of a bankruptcy will stop the foreclosure process. This way, the homeowner is no longer at the mercy of the mortgage company. The property is protected and the borrower continue negotiating with the mortgage company.
The Automatic Stay of the Bankruptcy Code Stops foreclosures. It is not up to bank or the mortgage company to agree or not to agree. They don’t have a choice! The law says the foreclosure process must stop.
In a Chapter 13 Bankruptcy, a borrower is given the opportunity to repay mortgage payments that have been missed over a maximum of five years penalty and interest free, while discharging credit card and other debt. While in a chapter 13 bankruptcy, the homeowner can keep on working on a loan modification and have peace of mind that his or her property is protected. This is a significant benefit of Chapter 13 Bankruptcy that is often overlooked.
It is also possible to get rid of second mortgages in a Chapter 13 bankruptcy. This is commonly known as Lien stripping. Second or third mortgage can be separated from the property and potentially wiped out.
We have had significant success at saving people’s homes and helping them keep their sanity in this very confusing and often overwhelming environment. You can always contact us for a free consultation.
Please note that we are a law firm with multiple locations assisting customers in the Metro Atlanta and Northern and Middle District of Georgia Counties. If you live outside this area, we suggest that you contact a law firm specializing in foreclosure prevention and consumer bankruptcy in your area.