Better Business Bureau and Foreclosure Rescue Firms

Anyone who has had a house go into foreclosure has gotten inquiries from several-perhaps a dozen-firms offering to save the property from foreclosure.  The Better Business Bureau offers this cautionary tale:

The Better Business Bureau has received complaints from across the country about foreclosure rescue companies. A majority of the companies are located in Colorado, Georgia and Florida, states with among the highest foreclosure rates.

n most cases, the pitch starts with a letter or postcard. “Stop the sale of your home,” they say. “We will keep you in your home — GUARANTEED!”

The fee is usually about $1,200, but some victims have lost as much as $2,000.

“Unethical companies are seeing their chance to step in and make some money off of these troubled homeowners,” says Karen Nalven, president of the BBB in Clearwater. In the last 12 months her office received more than 325 complaints about these companies. The total amount of refunds requested is more than $600,000.

On a regular basis prospective clients ask me whether I think they should file a Chapter 13 to save a home, or take some other step.  My response is usually to do both, to the extent that is possible.  Try to avoid bankruptcy if you can, but don’t put all your eggs in one basket.  If you are limited by time or funds to one option, I’d pick the sure thing.  Chapter 13 will stop a foreclosure, and give you a chance to catch up your payments.  Something else might work, but what will you do if it doesn’t?