Three Ways A Bankruptcy Attorney Can Help You With Mortgage Problems
If you have fallen behind on your mortgage payments and believe you have no hope of digging yourself out of the hole, there are several ways that a bankruptcy lawyer may be able to help. The following are three of them.
Your back debt can be reorganized
A Chapter 13 bankruptcy allows you to restructure your debts and make them manageable. This type of bankruptcy is a form of debt relief. What this means for your mortgage is that you may be able to restructure your outstanding debt into a separate payment that is structured over a few years. Of course, you will still have to make your current mortgage payments during the bankruptcy period. However, this is a good option for those who have the financial ability to make their current mortgage payments but are overwhelmed by their back debt. It is possible that some of the debt that constitutes back fees and penalties could be reduced by a bankruptcy judge but none of the principal.
A second mortgage can be eliminated
This is usually done with a Chapter 13 bankruptcy. If you have no equity in your house, this may be possible. An attorney can help you through the process, but basically, you will be demonstrating to a judge that you do not have the ability to pay the money back. And equally, if not more, important, there is no equity in your house to secure the loan. In essence, the second mortgage has become an unsecured loan. You will still be on the hook for the first mortgage, but you will still have your home.
To prevent a lender from billing you after a foreclosure sale
If you are facing a foreclosure and you want to walk away from the house, you should see a bankruptcy attorney first. If your mortgage is greater than the house's value, after the house is sold, you can be billed for the difference, including fees related to selling the house. A bankruptcy attorney can help prevent these charges with a Chapter 7 filing. You will lose your house in foreclosure, but you won't have the financial aftermath of the foreclosure hanging over your head.
Although a bankruptcy attorney may be able to help in many ways with fees and interest related to your mortgage, there is nothing that can be done about the principle. In addition, you must qualify for both a Chapter 7 and a Chapter 13 bankruptcy. If you are in trouble with your mortgage, a bankruptcy attorney can help determine if you qualify. If you do qualify and decide to file for bankruptcy, all processes of collecting on debt, including a foreclosure, will come to a halt. A bankruptcy lawyer can then help you get the best possible outcome in court.