The foreclosure crisis was supposed to end with help from the federal government. Consumer Bankruptcy News reports in the May 6, 2010 issue that the response of the federal government to the mortgage crisis is too slow. The article reports that is has “been more than one year since President Obama announced the establishment of the Making Home Affordable initiative that included the Home Affordable Modification Plan.” The plan was supposed to help between 7 and 9 million families restructure their mortgages and save their homes from foreclosure by the mortgage companies. The article goes on to report that “the actual number of homeowners who have received final, five-year loan modifications through the program administered by the U.S. Department of the Treasury stands at 168,708.
The Congressional Oversight Panel’s April 2010 report entitled, Evaluating Progress of Tarp Foreclosure Mitigation Programs, “finds that Treasury is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.” The report also states that in 2009, 2.8 million homeowners received a foreclosure notice,and one in four homeowners with a mortgage currently has negative equity. While housing prices have begun to stabilize in many regions, home values in several metropolitan areas continue to fall sharply.”
I have personally witnessed in my Dallas, Rome, Cartersville and Dalton Georgia office locations that consumers are not getting the promised federal help they need to stop the foreclosure of their homes. While I have seen a few loan modifications approved even after my clients have filed Chapter 13, most loan modification applications have been denied. I have been shocked how many mortgage companies are aggressively pursuing foreclosure in this dreadful market.
The good news is that Chapter 13 stops foreclosure In a Chapter 13 bankruptcy, we can eliminate credit card debt and medical debt. As a result, most consumers find it much easier to make their future mortgage payments when they no longer have worry about their past due credit card debts and medical debts.
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I think anyone who might be interested in keeping their house should explore Chapter 13 as an option before deciding to do a short sale or let the house foreclose. In a Chapter 13, we can take the payments that you are behind on and put them into a payment plan that will work for you. If you are in a position not able to make the future mortgage payments on your house, Chapter 13 may not be the best answer.
A short sale is when the lender agrees to take a lower price for a house than the amount owed to the lender. The main advantage of a short sale is that it protects your credit score from the damage of a foreclosure A short sale might be a good option for someone whose only debt problem is a house that can’t be sold for the amount owed. People who owe credit card debt, medical debt, car debt, and other types of debt should explore Chapter 13 and Chapter 7 before making a decision to short sale.
Amy Cochran, a short sale specialist from Cartersville, says that one of the most common mistakes she sees people make after they fall behind on house payments is that they move out of the house before the mortgage company takes any action against the house. When a house is empty, it is much more difficult to get a short sale completed.
It can’t hurt to explore all options. Weigh the pros and cons of each option before making your decision.
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The answer to this question is maybe. If you have a foreclosure scheduled against you, you should file Chapter 13 to stop the foreclosure and save your home. I have had so many clients where someone from the mortgage company called and told the homeowner that they would try to work something out to stop the foreclosure Nothing got worked out, and they lost their home. Ask yourself this question, “If the mortgage is willing to work with me, why did they file the foreclosure action against me in the first place?” If your mortgage company says they are going to call off the foreclosure, GET IT IN WRITING before the foreclosure date. If you are considering Chapter 13 to the stop the foreclosure, call me today at 888-832-8249 for your free consultation. We need time to get your paperwork prepared. Don’t wait until the last second.
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If someone tells you to pay them money so that they can “renegotiate your loan,” don’t do it! There are so many scams. Take advantage of a free consultation with an attorney and let a bankruptcy attorney review any offers you are considering.
If you want a loan modification, you can speak to your mortgage company directly. You don’t need to pay anyone to help you with any type of loan modification. Go to the Federal Trade Commission website and read all about the foreclosure scams. Call the FTC at 888-HOPE-NOW.
I was speaking with a client from my Dallas GA office a few months ago who was victimized by one these scams. She actually mailed some company in Florida $600 to get her loan renegotiated. This company did absolutely nothing for my client accept take her money. The FTC has really started cracking down hard on these types of scams.
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If you have a first and a second mortgage, you may need to consider bankruptcy even if you are willing to let the house get foreclosed. For more information on second mortgage issues, please see my prior post.
If you have only one mortgage and you don’t have any other debt issues, you probably don’t need to file bankruptcy in Georgia. Under Georgia law, a mortgage company is required to file a “confirmation of foreclosure” against you within 30 days of the foreclosure date. Mortgage companies almost never conduct a confirmation of foreclosure in Georgia. It is extremely rare for any mortgage company to pursue a deficiency on a first mortgage.
It might be a good idea to wait at least 30 days after the foreclosure to see if they take action against you. If they do, meet with a bankruptcy attorney.
Section 44-14-161 of the Georgia Code states in part, “(a) When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds, mortgages, or other lien contracts and at the sale the real estate does not bring the amount of the debt secured by the deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court of the county in which the land is located for confirmation and approval and shall obtain an order of confirmation and approval thereon.
(b) The court shall require evidence to show the true market value of the property sold under the powers and shall not confirm the sale unless it is satisfied that the property so sold brought its true market value on such foreclosure sale.
(c) The court shall direct that a notice of the hearing shall be given to the debtor at least five days prior thereto; and at the hearing the court shall also pass upon the legality of the notice, advertisement, and regularity of the sale. The court may order a resale of the property for good cause shown.”
Other Posts:
1. What is Chapter 13?
2. What is Chapter 7?
3. How much does it cost to file?
4. Stop Garnishment
5. Stop Foreclosure
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In Georgia, if you file Chapter 13 bankruptcy or Chapter 7 bankruptcy, the answer is never. Creditors can’t sue you in a Chapter 13 and a second mortgage holder can be wiped out in a Chapter 7 and a Chapter 13 if you are surrendering the house. In bankruptcy, the automatic stay protects you from lawsuits.
If you do not file Chapter 13 or Chapter 7, the answer to this questions depends on various factors. It depends on the mortgage company and how much money the house is sold for at the auction on the courthouse steps. If the house sells for enough money to pay all of your first and second mortgage, you are in the clear. In Georgia, this almost never happens in real life. In the current real estate market in Georgia, it is extremely difficult to sell a house for the tax assessor’s value. In most cases, a more likely scenario is that the house gets sold for enough money to cover the first mortgage holder but the second mortgage holder gets nothing.
Usually, the first step for the second mortgage holder is to try to work out some kind of payment with you. If this does not work, they will sue you in Georgia. Small banks tend to be the most aggressive collectors on second mortgages in Georgia. I have some case cases where the second mortgage company will sell the debt to some debt collector who may wait a few years before they institute lawsuits to collect on the debt.
After they get a judgment against you, the next step is to garnish your wages. If they garnish your wages in Georgia, they are going to take twenty five percent of your net income. In addition to garnishment, they can use the judgment to seize any money in your bank accounts.
Other posts you might be interested in reading.
1. What is Chapter 13?
2. What is Chapter 7?
3. How much does it cost to file?
4. Stop Garnishment
5. Stop Foreclosure
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Yes. While a second mortgage holder may have the power to foreclose, they almost never take this course of action unless there is a significant amount of equity in the home. In order for a second mortgage holder to foreclose on your house in Georgia, they must first pay off the first mortgage holder. Most second mortgage companies are not willing to take the risk of paying off the first mortgage and then failing to recoup their investment at the sale on the court house steps. With the current depressed values of real estate, I don’t foresee second mortgage holders conducting foreclosures anytime soon.
If a person fails to make payments on their second mortgage but continues to pay the first mortgage holder, the second mortgage holder can sit back and wait for the first mortgage holder to be paid off. After the first mortgage is paid off, the second mortgage holder assumes the first position and can then conduct a foreclosure
Chapter 13 is a great tool for catching up past due mortgage payments. Call me today at 706-295-0030 for your free consultation so that we can discuss your options.
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