06 Nov Is your home in danger of foreclosure?
Did you receive a Notice of Default on your home? Are you denied a Loan Modification? If this is your situation then your home is in danger of being foreclosed and you must have a plan of action to keep your home. Below are some of the ways you can do to help you keep your home.
- If you have two loans on your house and it is underwater, the second loan probably has no equity and its lender would not be able foreclose if you have been late in payments even for years. If this is your case, then your payment priority is to the first loan because this is the lender that is in position to foreclose your home.
- If your available money is not enough even for the first loan of your house, you have to analyze your financial position. If you have plenty of credit card debts, you can eliminate those debts by filing Chapter 7 bankruptcy. By this time your credit score is already very low and filing bankruptcy will pull it down just a few points. However after your discharge from bankruptcy you can immediately rebuild your credit. Debt settlement or debt consolidation will not solve your problem because it is a process that will take three to five years with your credit keep going down. Debt settlement is a waste of money and almost everyone who paid large sums of money for debt settlement ended up filing bankruptcy. After filing bankruptcy you can rebuild your credit within three years. You can buy again real property after three years. Credit cards and auto loans will be offered to you within months after your discharge from bankruptcy.
- You should review all your expenses and eliminate whatever expenses that can be dispensed with or eliminated.
- You should try again to modify your loan even if you have been denied before. After your bankruptcy discharge, your financial situation will improve a lot because you have no more unsecured debts and you will have a better chance of getting approval. I have clients who were previously denied for loan modification because of large unsecured debts but after their discharge from Chapter 7 bankruptcy, their financial situation improved and they were now approved for loan modification.
- In addition, your chance for loan modification application is improved with the settlement by the U. S. government of its lawsuit against the banks. The top five banks agreed to set aside $17 billion to modify your loan and possibly reduce the principal amount by about $20,000 on the average if your house is underwater. You may also be able to refinance your mortgage is you are current in your payment.
- If you received a Notice of Trustee Sale, you can stop the sale by filing bankruptcy before the Trustee Sale date. If you have filed a Chapter 7 before and you were already discharged, you can file a Chapter 13 even immediately after your discharge in Chapter7. The purpose of filing Chapter 13 bankruptcy is to stop the Trustee Sale and to offer a payment plan for your secured debts such as your house and autos. With the automatic stay from the Court, creditors are prohibited from selling your house until the court approves your payment plan. While you are in Chapter 13 proceedings you can continue to apply for loan modification.
- If you are a victim of mortgage fraud, you can litigate your case. A Temporary Restraining Order from the court will stop the foreclosure of your house.
Note: This is not a legal advice.