Filing For Bankruptcy Will Not Leave You Homeless


According to John Morgan of John Carter Morgan, Jr. PLLC in Warrenton, Virginia, a noted bankruptcy attorney with experience in Chapter 7 and Chapter 13 cases, filing for bankruptcy is not going to leave you homeless. In fact, both homeowners and renters are generally protected from losing their homes throughout a bankruptcy process.




 As a renter, you don't have to worry about anything happening to your home during bankruptcy, just as long as you continue paying your rent on time each month. Basically, renters need to make sure that they allot enough money for rent each month, because if they get behind on payments then they can be evicted by their landlords-regardless of whether they are filing for bankruptcy or not. While filing for bankruptcy can forestall an eviction, the relief is only temporary; so renters need to keep up with their monthly payments as best as possible. 

However, the majority of people I see who are worried about losing their homes aren't renters, but rather owners. Homeowners in Warrenton, Virginia, who hire a bankruptcy attorney and file for a Chapter 7 or a Chapter 13 should be able to keep their homes as long as they keep making payments on their mortgages each month.

 Chapter 13 and Repayment Plan
 
While both common bankruptcy options allow debtors to keep their homes, I usually advise clients who have equity built up in their homes to choose a Chapter 13 filing if they can. The difficulty in a Chapter 7 is that if your house is worth $200,000 but you only owe $100,000 on it, then you have equity in it. Anyone who has equity in his home should think about filing a Chapter 13 bankruptcy rather than Chapter 7, since that option offers a repayment plan that works better for those with equity.

 People need to know that they are only going to be allowed to stay in their homes if they continue making mortgage payments each month. We always say to people, "If you pay, you stay. If you don't, you won't." And that is certainly true when it comes to keeping your home during bankruptcy.

 Chapter 7 and Loan Modification

 Throughout the 1990s, I encouraged homeowners who were behind on their mortgage payments to file for Chapter 13 bankruptcies and use debt reorganization as a way to catch up on their payments. In the last two or three years, however, instead of using Chapter 13 to catch up, people have actually been filing for Chapter 7 bankruptcies and getting loan modifications.
 When it comes to a loan modification, it is when someone asks a bank or lender to change the terms of a mortgage.

Unfortunately, the banks are refusing to negotiate with people who are caught up with their payments. That's why I encourage people to fall behind by three payments before starting the process of negotiating on a loan modification. If you get behind three payments then the bank will start talking to you. That might not always be the case, but in our experience in recent history, that's how it has been.

 Many people come out of the loan modification process in a much better place than where they started. If you are able to negotiate a loan modification, then you can oftentimes bring the interest rate on your mortgage down from 7.5% or 8% to 4.5% or 5% interest. While the rules within the industry are changing from month to month, some people are able to negotiate better interest rates than others.
Among the bonuses that some people are able to negotiate-in addition to lower interest rates and extended loan lifespan-is a reduction in the principle of the loan. Although this is less common, I have seen cases where banks were willing to reduce the principle amounts of loans for borrowers. That is pretty rare though, and it is only done in the instances where the bank has violated some federal law in a way that was pretty gregious.

 If you contemplate filing for a Chapter 13 or a Chapter 7 bankruptcy, then you should realize that loan modification is a pivotal part of the debt reduction process. The purpose of loan modification is to help you get caught up on payments and ultimately to change the terms of a mortgage in order to create something that you can legitimately pay back. An experienced bankruptcy attorney should be able to look at the facts and guide you towards the right filing decision based on the merits of your individual case.

 This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.


0 Response to "Filing For Bankruptcy Will Not Leave You Homeless"

Post a Comment

Iklan Atas Artikel

Iklan Tengah Artikel 1

Iklan Tengah Artikel 2

Iklan Bawah Artikel