Bankruptcy may help end your foreclosure nightmare so you can start seeing light at the end of the tunnel.  Filing for bankruptcy immediately stops collection calls.  In addition, certain categories of property, mainly homestead or primary residences, may not be taken by creditors after a debtor files for bankruptcy.  This protection may also include motor vehicles up to a certain value, some clothing and household furnishings, life insurance and portions of earned wages. Any obligations to repay debts are erased through the discharge of the debts during the bankruptcy process. Therefore, the debtor is no longer legally liable for the debts, which will help a debtor’s ability to maintain a reasonable level of credit payment history over the course of the next ten years.

But there are some disadvantages to filing bankruptcy. Most importantly, it will affect your credit for at least 7-10 years.  While a foreclosure case has a mandatory 7-year statute of limitations, bankruptcy does not.   Other disadvantages include losing credit cards and non-essential possessions, the inability to obtain a mortgage (and other loans) and embarrassment.  Certain other debts will not be discharged in a bankruptcy, and the bank has up to five years to come after the borrower for the deficient amounts.

Please be aware that neither JoAnn Taylor nor HarderandSmarter Realty is engaged in the practice of law; the information in this post is not intended as  legal advice.  You are strongly advised to seek legal counsel if you think bankruptcy may be right for you.

1. Be an active participant.  Its your loan. You will be held accountable in the final analysis.

2. Take an honest appraisal of your financial situation. Contact me via e-mail if you need a financial worksheet (e-mail jtaylor@harderandsmarter.com and put 'financial worksheet' in subject line).  The bank is going to want to know if they can recover the money they have lent you.  Be prepared to discuss: how far behind am I? am I currently employed? is it likely that I’ll have the resources (either from myself or friends and family) to bring my loan current?

3. Open your mail, especially if it comes from your bank.  Answer calls from them.  You probably feel embarrassed, but you shouldn’t be.

4. Keep records – not just of letters, but of every conversation.  Ask names and record them, along with the date and a record of what was discussed.

5. Call your bank.  Ask to speak with someone in loss mitigation.  Other names for this department might be asset recovery, workouts, or home preservation.   Be persistent.

6. Know the lingo.  The common types of loan workout programs that will probably be discussed are:

• A reinstatement plan you agree with the lender to bring your loan current with a lump sum.  If your mortgage is insured you may qualify for an interest-free loan from the guarantor to use.

• A forbearance plan the lender agrees to suspend or reduce payments for a short period of time as long as there is another option to bring your loan current.  It may be a reinstatement, or they may want you to increase your payments until the deficiency is paid off (A REPAYMENT PLAN).

• A loan modification changes the terms of your loan, either your interest rate, the principal owed, or the length of the loan.  Remember you must qualify for these plans, and usually income and credit are key factors.  95% of people who are at least 60-days behind won’t.

7.  If bankruptcy is an option get a lawyer.

Have additional questions?  Need more information?  Contact me anytime - I'll be happy to help!

Information deemed accurate but not guaranteed. HarderAndSmarter Realty is not engaged in the practice of law nor does it give legal advice. 

Bank of America Cooperative Program: In this program, qualified households that participate in this short sale program will receive $2500 at closing.

HAFA: In this program, qualified households who participate in this program (which has both short sale and deed-in-lieu of foreclosure options) receive $3000 at closing. (Fannie Mae and Freddie Mac also participate in HAFA.)

Chase & Citi Bank: Both of these mortgage lenders are now sending certain borrowers letters offering them the option of participating in a short sale for a significant incentive (often between 20,000 and 35,000 dollars). Read the fine print on the offer and follow all of the rules in order to receive this incentive at closing.

Wells Fargo: Wells Fargo frequently sends borrowers letters asking them to participate in a short sale and offering an incentive in the letter. Sellers should read their mail and save the letter so that they can redeem the incentive at closing (usually between three and five thousand dollars).

Ocwen: Ocwen frequently sends borrowers letters asking them to participate in a short sale and offering an incentive in the letter. Sellers should read their mail and save the letter so that they can redeem the incentive at closing (usually between three and five thousand dollars).

1. You own it: With no landlord, you make the decisions.

2. You deduct it: Mortgage interest, property taxes and some costs involved with buying a home can be deducted from federal income taxes.

3. Interest rates: The cost to borrow mortgage money is at an all-time low. If you’re going to buy, this is the time to jump into the market.

4. You invest in it: Rent money is gone forever. Mortgage payments build home equity ownership interests.

5. You save for the future: Home equity is a ready-made savings plan. Sell it and you can make up to $250,000 cash without owing any federal income tax on the profit.

6. You can predict expenses:  Unlike rent, a fixed-mortgage payment doesn’t get more expensive over time.

7. You pick it: Choose from different neighborhoods, styles and price ranges, based on what you can afford.

 
8. You create it: Decorate, renovate, get a pet or paint the walls whatever color you want – it belongs to you.

9. You live in a neighborhood: You and your neighbors take pride in the local schools, roads and more – and you work together to build a friendly community.

10. You spend money on yourself: When you buy a chandelier or hardwood floor or kitchen cabinet, you’re spending hard-earned money on yourself and building your equity at the same time.

Don’t you owe it to yourself to try and save your home? Call me for help today!