Wednesday, October 30, 2013

Saving You Home From Foreclosure

The primary focus of our law practice is dedicated to helping homeowners save their homes, whether it is from a mortgage foreclosure or a foreclosure by a condo or homeowner association.

Mortgage foreclosure defense is an area of law which changes frequently.  As new issues with mortgages are discovered, defense attorney proffer new arguments in court and the judges rule on these new issues.  The condo and homeowner associations push for new legislation each year to try and resolve the issues they face from the mortgage foreclosures.

The single biggest mistake I see homeowners making is to not pay the association while the bank is foreclosing.  Many owners believe if the mortgage company is foreclosing, the association can't.  That is completely not true and the association can foreclose quickly because there aren't any defenses available to stall the process.

In recent years the federal bankruptcy courts in Florida have adopted a mortgage modification mediation program for owners to obtain loan modifications through a Chapter 13 bankruptcy.  I have come to realize this is not only a valuable tool to save the home, but makes the most sense.

Chapter 13 is a restructuring of debt which allows the debtor to retain assets and set up a repayment plan for those debts secured by the home (mortgages, assessment liens).  A Chapter 13 bankruptcy makes sense for a couple reasons:

1. While you are in foreclosure your credit is damaged.  The quicker you resolve it, the quicker you can build credit.

2. The stress of dealing with a foreclosure every day for years is not worth it.

3. Even if you have good arguments and a chance of winning your foreclosure case, there is always the risk you will not win.

I firmly believe the best option is to deal with it head on and resolve it now instead of re-living it day in and day out.

What are the drawbacks?  The biggest drawback is having the first monthly payment for the bankruptcy trustee.  If you're used to paying your bills each week, you now have to be ready to pay once a month.  There are ways to help make sure you can do this, either by setting up a step plan (lower payments the first few months) or strategically filing so you have a few weeks to save up the first payment.

There are other drawbacks.  Some people have a hard time handing their finances over to the trustee because they are used to being in control of their own money, but if someone has reached the point they are about to lose their home, letting someone else pay your bills could very well be a blessing.  I firmly believe the benefits outweigh the drawbacks.

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