RealtyTrac recently reported that, the state of Florida has been in the top 10 of states with the highest rate of foreclosures in the U.S. for the past five years. Of course, not every default on your mortgage payments results in a foreclosure filed with the court and not every foreclosure filed with the court results in an actual foreclosure of the home.
Some homeowners have been able to prevent foreclosure through various modifications or “work-outs” through the Home Affordable Modification Program (HAMP) and other modification programs as well.
New guidelines effective June 1, 2010, streamlined the modification process by making it more orderly and ensuring participating lenders respond to homeowner inquiries in a timely manner. However HAMP has sometimes fallen short of its goal of preventing foreclosures.
The current guidelines for a HAMP modification state that a borrower cannot be denied solely because of a bankruptcy filing. HAMP should continue to be an option even though the homeowner had filed a Chapter 13 case or a Chapter 7 case.
At this time if you are in the process of a modification, the filing of a 7 MAY disrupt that modification…Not that you cannot re-apply, but it may stop the process and if you do not sign a reaffirmation agreement (as the one client we had that was an issue) the bank can decide not to work with the debtor on a modification after the fling because there is no longer a debt as the debtor did not reaffirm (I never recommend reaffirmation of a delinquent debt in the bk.
This may change with the new Bankruptcy Administrative Order effective in November, 2012. Since the filing of a Chapter 7 would allow the debtor to request a mediation and HAMP modification within the Chapter 7.
Options are available
As a homeowner concerned with falling behind on mortgage payments, or who is facing foreclosure, you are clearly at a disadvantage in dealing directly with the mortgage lender or the lenders attorney. Having an experienced bankruptcy and foreclosure defense attorney on your side can make all the difference.
At a time in Florida in which homeowners have experienced depreciation of home values, homeowners often find that their home is “underwater” (the value of the home is less than the balance owed on the home). Depending on your situation, either Chapter 13 or Chapter 7 bankruptcy can help preserve your home, get control of your debt and finally get closure with your creditors.
Options to preserve your home, get control of your debt and finally get closure with your creditors are available in both Chapters 13 and 7 depending upon your particular situation and concerns.
For example, if a homeowner has a second mortgage and the value of the home is less than the loan balance on the first mortgage (“underwater”), a homeowner in a Chapter 13 case would be allowed to “strip off” the second mortgage. The remaining loan balance on the 2nd mortgage would be treated as an unsecured debt (like a credit card or medical debt) through a Chapter 13 plan to adjust your debts.
In a Chapter 7 case, it may be possible to eliminate a homeowner’s personal liability for any mortgages on the home and still remain in the home. A free consultation with our representatives at Corona Law Firm PA will determine what option may best suit your particular situation and concerns.