Clients of the Law Offices of Daniel G. Shay count on attorney Daniel G. Shay for sound advice about the best ways to resolve home mortgage problems both in and out of bankruptcy. To learn more about the ways we can help you save your home from foreclosure — or decide whether your mortgage is worth saving — contact our office in San Diego for a free initial consultation with a knowledgeable attorney.
If you have missed two or three mortgage payments and don’t expect to bring your account current right away, the sooner you get a lawyer’s advice the better off you’ll be. Your useful options will only shrink as time goes on.
Some of our clients are interested in loan modifications or short sales to resolve mortgage problems, especially if they involve ARM clauses or other periodic changes. We have filed bankruptcy cases for many people who previously paid $2,000 to $3,000 for a loan modification with no results. On the other hand, we’ve also worked with people who have had good experiences with HUD-approved mortgage counselors who charge minimal fees or nothing at all.
If you’re interested in saving a troubled mortgage situation without filing for bankruptcy protection, we can make free referrals to the counseling resources that we think will be right for your circumstances. Nevertheless, most of the people we work with get more benefit from bankruptcy than they can realize through any other approach.
With very few exceptions that don’t generally apply to home mortgages, the commencement of a bankruptcy case brings debt collection activities (including foreclosure) to a complete and immediate halt. Mortgage lenders must ask for and receive bankruptcy court approval if they want to begin, continue or resume foreclosure of your mortgage. The lender’s interest in seeking this permission and the court’s inclination to grant it depend on many factors. At the beginning of the bankruptcy case, at least, the last thing you need to worry about is the sheriff’s sale of your property.
If you have significant equity in your home, you have a definite advantage. The equity helps to protect the lender’s position, and the court won’t likely grant relief from the automatic stay to begin or continue a foreclosure. If you have little or no equity in the property, you still stand to benefit from bankruptcy. Your second and third mortgage lenders only hold secured claims to the extent of the property’s value, and the rest of the mortgage debt is treated as unsecured and subject to discharge in Chapter 13 bankruptcy. The rule is that if real property is worth less than the first mortgage, then the second and third mortgages are treated as unsecured debt and the majority of said debt will be discharged like credit card debt upon completion of the Chapter 13 plan.
Known as “lien stripping,” this feature of the bankruptcy process relieves debtors from the need to pay a home equity creditor or judgment creditor anything more than the value of the property that secures their claims.
If you’re more interested in keeping your house than avoiding liability on a deficiency on your mortgage debt, bankruptcy can help there too. Past-due payments can be bundled together and paid over time in a Chapter 13 case. In some situations, so-called “Chapter 20” can operate to save your home — you file a Chapter 7 case to get a discharge on unsecured debts, then file a Chapter 13 case to take care of mortgage arrearages and nondischargeable debts.
For more information about our ability to advise you concerning home mortgage problems, contact Law Offices of Daniel G. Shay in San Diego for a free consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.