Many people have attempted some sort of loan modification either on their own or with the help of paid professionals in order to head off a foreclosure on their homes. A loan modification can lower interest rates (thus lowering monthly payments) and tack mortgage arrears to the back of the loan, extending its term. When a loan modification is granted it is a boon to the consumer who cannot currently afford the loans that encumber their principal residence. Unfortunately, many people who are applying for loan modifications on their own or through non-attorney organizations will not obtain satisfactory results in a reasonable amount of time due largely to the banks inability or lack of desire to assist. Most loan modifications today are taking an average of 6 months.
Many of my clients believe that the banks will choose to work with them rather than foreclose and take over a property that is underwater. This is not the case. Banks will mechanically foreclose with little regard as to whether it makes business sense for them to do so.
There are many ways to delay or forestall foreclosure, however, when a sale date has been set there is only one certain way to unilaterally stop the sale and that is a filing of bankruptcy that triggers the automatic stay. While this topic is complicated and all of the circumstances need to be considered by the homeowner as well as the long term desired outcome, it is a fact that a filing of chapter 7 or chapter 13 bankruptcy "stays" a sale. A Chapter 7 filing may only be a temporary fix, while a Chapter 13 filing could provide for a cure of arrearages,eliminate unsecured debt and even make provision for tax payments.
If the homeowner has no means of paying his or her mortgage at the current rate and interest amount, modification efforts can still be undertaken during the bankruptcy process. A mandatory mediation plan is in effect in most jurisdictions and while the bankruptcy court has not been given the power to modify mortgages by Congress (despite the general believe that such power would be extremely beneficial), the lenders must mediate before they can foreclose.
If you are behind in your mortgage payments we have financial strategies that can help you. Contact us today to speak with an experienced Westchester County bankruptcy attorney who can review your situation.