Bankruptcy attorney, Ari Linden, answers our question and answer series part four:
If I am facing a foreclosure and I have been unable to obtain any relief such as a short sale of the property or a loan modification to reduce current monthly obligations on the existing mortgage, what alternatives do I have?
In this tough economic environment, we hear these issues from our clients consistently. I advise clients that the answer is dependant upon their goals. By this I mean that our clients typically fall into 2 distinct groups, (a) they desire to stay in the home but cannot continue to make full payments for the mortgage(s) or (b) they are willing to leave the home but are concerned about the effects of doing so on their credit, judgments that may be levied against them and generally their economic future. As a bankruptcy specialist, I try to make clients understand that there are options. Bankruptcy being one of those options, however, there are non-bankruptcy options including a deed in lieu of foreclosure (giving the property back to the bank but being relieved of any future obligation associated with the prior debt), loan modification (negotiation with the mortgage holder to reduce the monthly obligation by way of reduction in interest rate, reduction in monthly payment amount but keeping the existing mortgage in place and staying in the home). If these options fail, then it is important for clients to understand that there are two primary types of bankruptcy available to individuals – Chp 7 (liquidation) and Chp 13 (reorganization). Depending on their income and their desires with regard to the property, each offers benefits. The primary difference in regards to effect upon the home is that under a Chapter 7, any obligation that would be associated with the mortgage, including a judgment in foreclosure will be avoided in terms of the personal obligation, but after the 90-day stay (essentially a pause in legal proceedings) expires, the home will again be available for foreclosure but without any ability for the mortgage holder to seek personal judgment against the debtor. With a Chapter 13, the home can be saved, the mortgage arrears paid off in the Chapter 13 and the person will retain the home.
For more information or to schedule a consultation, contact Bratton Law Bankruptcy Attorney in, Haddonfield, Philadelphia, and Ewing. 856-857-6007
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