At What Point Should I Get An Attorney Involved In My Foreclosure Situation?

We recommend getting an attorney involved after you miss a monthly payment -- so before the foreclosure case even gets filed. If you’re struggling to pay your mortgage loan, experiencing a hardship related to a job loss, a medical issue, school expenses, etc., that makes it difficult to pay your mortgage, then it makes sense to hire counsel.

What Will Hiring a Foreclosure Defense Attorney Do for Me?

Few events are more devastating to a family than the loss of a home to foreclosure. Hiring a lawyer will simplify a complicated, stressful, and emotional process by putting it into the hands of someone who can help and who is very experienced with the process. It can bring stability to a volatile situation.  It can level the playing field and allow you to negotiate more effectively with the bank, to save your home. It can give you peace of mind. It can help you avoid having to file for bankruptcy. If the goal is not to permanently save the home, it can postpone a foreclosure long enough to allow the family to find appropriate housing and move on their terms with dignity. At bottom, it keeps the ground you call home from suddenly falling out from under you.

How Are Your Services an Alternative to a Chapter 13 Bankruptcy?

Before we jump into how our services help avoid bankruptcy, let’s first look at the two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is a liquidation, meaning it never helps you save your home. Chapter 13, on the other hand, is a reorganization that could help you save your home. In Chapter 13, you propose a plan of reorganization to all of your creditors and start making payments to them if the plan is approved.  During your repayment plan, you have to pay your creditors all past due amounts while also staying current on future payments. The monthly payments in a Chapter 13 bankruptcy can be very expensive because you have to add the past due amounts to what you already owe each month, rendering them basically unaffordable. More than 50% of Chapter 13 bankruptcies fail.

With foreclosure defense, we don’t have to treat all of your creditors equally the way you do in a bankruptcy. We can be selective regarding which creditors you want to settle with and which ones you don’t. We can help you obtain a loan modification and, by doing so, reduce your monthly payments and have you start making regular payments again. We can also be more targeted than a Chapter 13 bankruptcy allows. We don’t have to negotiate with your lender on your vehicle while you’re trying to deal with your home loan, for instance. Furthermore, there is a significant negative impact on your credit report after bankruptcy is filed. The effect of a bankruptcy on your credit can be far more detrimental than if you save your property through a foreclosure case.

Finally, a Chapter 13 bankruptcy will take years of payments made under the plan before you can cure the default. A bankruptcy plan is usually three to five years, and during that time, you have to make every payment precisely on time for the entire duration. When we modify a mortgage loan, we cure the default on day one. All of those past due amounts are dealt with, whether by being deferred to the very end of the loan as a balloon payment, by getting recapitalized over the life of the loan, or by being forgiven. Your financial burden is now spread over the next 20 or 30 years, however much time is left on the loan.

How Has COVID-19 Impacted Foreclosures?

Since the beginning of the COVID-19 pandemic, we have seen various federal, state, city, and local laws, regulations, and programs introduced. Generally, these programs are intended to help homeowners who are struggling due to COVID and generally do not apply to prior defaults (say before February of 2020), but they are not a permanent solution. They are like a bandage; they provide a temporary fix, but once the programs go away, the mortgage debt will still be there, and the defaults will have to be cured.

To illustrate, there is a federal statute called the CARES Act, which allows homeowners to not make any loan payments for up to 12 months. But those 12 months of loan payments are not forgiven; they will have to be dealt with in month 13. There will be a come-to-Jesus moment with the lender, and at that point, the homeowner really needs an exit strategy, some solution like a loan modification. All of that is not to say that the programs aren’t good. The government’s COVID-19 programs have been vital relief for many homeowners.

For more information on Hiring a Foreclosure Defense Attorney, an initial consultation with our office is your best next step. Get the information and legal answers you need by calling (312) 600-8815 today.