Does Working On A Mortgage Modification Stop Foreclosure?

14 Dec Does Working On A Mortgage Modification Stop Foreclosure?

HOUSE Porch and wreathBankruptcy filing will stop a foreclosure in it’s tracks, but if you are working on a modification hoping that it will help, you need to beware.

Foreclosures do not automatically stop if you are working on loan modification with your mortgage company, and you might not find this out until it is too late to save your house.

You may think you are safe while you are negotiating in good faith and doing everything your lender asks, only to learn that the lender is still moving forward with the foreclosure sale and time is running out to stop it!

  • I hear from panicked homeowners who are told that their modification has not been approved, and their home is a few weeks, days or even hours away from being sold. Even worse, some people say that it has already been sold!

If you are being told that your foreclosure has been stopped,you need toget it in writing.

I hope that the mortgage companies are not intentionally dragging out the process trying to get people so far behind that it is impossible to catch up, or that they aren’t using the promise of help to keep homeowners from looking into other options until it is too late to do anything else. Regardless of whether it is intentional or not, that is what is happening.

If your mortgage modification negotiations fall through, you need to have a back up plan.

The worst thing you can do is spend the money you would have paid towards your mortgage, driving up the amount you would need to catch up if your modification is turned down.

  • While you are trying to get your loan modified, you should save as much money as possible in case you have to look at other solutions to stop the foreclosure, especially if you are not making your mortgage payments in the process.
    • Don’t use the money you are ‘saving’ by not paying yourmortgageto pay off credit cards, medical bills, or other general debts without speaking to a lawyer. Those debts might easily be written off in bankruptcy, while your mortgage can not.
    • If you have some money saved up, it can only help you. If you have to move, you’ll need money to move as well as a deposit on your new home. If you want to file for bankruptcy, it may cover legal costs or lower your bankruptcy payments.
    • You may be able to get a more affordable payment in bankruptcy if you can pay some of the missed payments, or you may be able to use those funds to settle past due payments.
    • The funds you set aside can make the difference between keeping your house or not.
  • Bankruptcy might be available to you, and if so willstop foreclosureif the modification falls through. Youneed to understand how it can affect you and if you are able to do what is required in bankruptcy to save your home.
  • Chapter 13can give you up to five years to catch up the missed payments, and it can write down debts like credit cards, loans, or medical bills.
  • Chapter 7can wipe out other debts that you may have been paying instead of your mortgage, freeing you up to use your money to pay your mortgage.
  • If you want to modify your mortgage because you have other debts to pay and you don’t have enough money to pay it all, bankruptcy might discharge enough other debts to free up enough so you can pay yourmortgage, even withoutmodification.
Some people think that they only way to get their budget to work is to get the mortgage modified, when it might be much easier to deal with the other bills instead.

Another thing to keep in mind is that if you are having problems with your mortgage, you might also have problems with your other debts.

In fact, many people fall behind on their house payments in order to try to pay unsecured debts, such as loans, credit cards and medical bills.

  • Bankruptcy can reduce some/all of your unsecured debts or help write them off completely, which can free up funds to pay towards your house payments and other needs.

Seek the advice of an experienced bankruptcy attorney as soon as you can, just so you know if bankruptcy can help you or not if the modification falls through.

You may also find the lawyer is able to help you find a better option to deal with your debts, either by filing one of the different kinds of bankruptcy cases , or other methods such as by a debtmanagement,credit counseling program, or debt settlement.

It is good to know what bankruptcy can do, and if it is a good option.

It makes sense to know all your options while you are making these important decisions so that you can pick the best option for you…before you run out of time.

see also:

Consider Non Bankruptcy Alternatives For Debts and Many People Keep Their Homes When They File For Bankruptcy by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

 

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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