Don’t Wait To The Last Minute To Try To File Bankruptcy: More Problems With Mortgage Companies and Mortgage Assistance Companies

As a consumer bankruptcy attorney I get calls every day from people desperate to see a bankruptcy attorney as soon as possible. Many are facing a foreclosure sale in days, or even hours, and there is precious little time to get in to see an attorney, let alone to get the information together to file a Chapter 13 bankruptcy. When asked why they waited so long to call for help, I hear the following answers over and over:

“I was working with a mortgage assistance company / my mortgage company, and they just told me that they couldn’t help.”

“I was working with a mortgage assistance company / my mortgage company, and they just told me how much money I had to pay and I can’t possibly come up with it.”

I see people who have been “trying to avoid bankruptcy” so they worked in good faith with a company who strung them along, only to tell them at the last minute that they couldn’t help the homeowner. What makes many situations seem even worse is that it would have been apparent to any attorney from a brief review of the client’s situation that Chapter 13 bankruptcy would have been their best option.

Any homeowner can call the mortgage company’s loss mitigation department to see if a repayment plan can be set up. The fee that is charged by the mortgage assistance company is normally non-refundable, and all the company may have done is call the mortgage company and ask for a workout. If an attorney charges that much for a phone call or two, they would be [rightfully] accused of overcharging for the services.

Some people are able to get in to see an attorney and get the bankruptcy documents prepared in time to stop the sale, but it is frustrating as an attorney to say over and over again to a client, “This sure would have been a lot easier if you had come in earlier.” Sadly, people call too late to be helped, but they would have easily have qualified to file a Chapter 13 bankruptcy case and saved their home.

Bankruptcy lawyers will explain how Chapter 13 might help the homeowner catch up the missed payments over time, and reduce other debts so they can afford to make the mortgage payments. Bankruptcy lawyers will also make other recommendations, and any good attorney will tell a potential client when they don’t think bankruptcy is a good option. It can’t be said enough: Going to a bankruptcy lawyer for a consultation does not mean that someone is going to file for bankruptcy, just that they are going to learn what bankruptcy can or can’t do so the person can weigh the pros and cons against all their options.