Lie of the Day: “Bankruptcy Won’t Stop Foreclosure For Troubled Borrowers”
By Brett Weiss, Maryland Bankruptcy Attorney on Feb 21, 2007 in Bankruptcy Protection & Automatic Stay, Benefits of Bankruptcy, Chapter 13 Bankruptcy, General Bankruptcy Information, Maryland
A recent e-mail I saw had a subject header that really surprised me: “Bankruptcy Won’t Stop Foreclosure For Troubled Borrowers.”
Now, since I’m a bankruptcy attorney, spend most of my day filing Chapter 13 cases for clients to stop foreclosures, and actually have stopped thousands of foreclosures for clients over the years, I was a bit surprised to see this.
The basis for this misleading headline appears to be the fact that bankruptcy will not permanently stop a foreclosure if you never make any more mortgage payments. In the words of my teenage daughter, “Well, duh!” I don’t think anybody really thought a bankruptcy allowed you to keep your house without paying for it.
What bankruptcy does do is stop the foreclosure and give you up to five years to catch up your payments. Even if you’re unable to do so, it can still buy you time to refinance or get some more time to sell the house.
So why the misleading headline? Look at who wrote the article: an equity skimmer—someone who buys the equity in your house for pennies on the dollar (see my article, How Mortgage Foreclosure Scams Rip You Off, that discusses equity skimmers in more detail). He wants people with financial problems to call him, so that he can make tens or hundreds of thousands of dollars of profit off of the home equity you worked so hard to build up. And Chapter 13 bankruptcy? It lets you keep your equity.
And wouldn’t you rather keep your equity instead of giving it to somebody else?
If you liked that post, then try these...
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The Real Party in Interest and Motions for Relief From the Automatic Stay by Brett Weiss, Maryland Bankruptcy Attorney
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