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Bankruptcy Not a Cure for Foreclosure
Bankruptcy May Not Prevent Foreclosure Homeowners facing foreclosure may not find the relief they are looking for in bankruptcy court. Here is a likely scenario: Homeowner is 2 months behind on mortgage payments and contacts a bankruptcy attorney to seek protection for their home. By the time the filing takes place and the trustee approves the plan another 60 days have passed. Now the homeowner is 4 months behind. With only a percentage of the bankruptcy payment going to the mortgage the homeowner is NEVER able to catch up, all the while late fees and attorney fees are being added to the loan. Unless the debtor/homeowner is able to pay their full mortgage payment PLUS the bankruptcy payment the lender will petition the court for a “stay of relief” which permits a creditor to take certain specified actions, to collect a debt against you which in this case would be to proceed with the foreclosure. Homeowners in trouble have a much better chance of getting a workout with the lender before they file the bankruptcy. Bankruptcy is seen as a hostile action to the lender and they are much less willing to work with the debtor homeowner after the filing of bankruptcy. The marketplace is flooded with mixed messages, most of which, are not in the best interest of the homeowner. Homeowners are urged to contact their lender and in doing so often find themselves dealing with third party collection agencies working on a commission. In cases where the homeowner is say $8,000 behind and they can only pay $5,000, the collection agency accepts the payment, so they can get their commission, but it does not stop the foreclosure proceeding because the loan has not been fully reinstated. In other situations, homeowners are seeking public assistance and finding help only filling out the lenders forms. Most of these agencies have no knowledge of the lender’s requirements for approving a successful workout. Different lenders have different requirements, and there are different requirements for FHA, Conventional and VA loans. Homeowners facing this difficult situation should seek the help of a professional trained in loss mitigation. Lenders have loss mitigation departments but who is mitigating the homeowner’s loss? For more Information Contact
Jan Gudis
Certified Loss Mitigation Consultant
jan@ffpsmail.com
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This intel was contributed by jgudis
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May, 2012
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