Stop foreclosure of your home

Without bankruptcy protection you have nothing to help you stop your mortgage lender from repossessing and foreclosing on your property if you’re behind on payments. Bankruptcy law can stop the foreclosure process at anytime before the sale occurs, typically you’d want to file bankruptcy chapter 13 since this chapter will allow you to reach a new agreement for paying the arrears on the mortgage. Chapter 13 makes more sense for filers who want to keep possession of a particular asset such as home. No part of your loan balance or past due payments will be discharged, this will only allow you catch up on payments.

Discharge credit card debt and other unsecured debts

When settling credit card debt with your creditors proves to be impossible because of the terms they impose, consumers have the option of filing for chapter 7 bankruptcy in which typically all unsecured debts may be discharged. Discharging unsecured debt is a way to get a fresh start, if the debt can not be discharged because the means test does not back up the level of financial hardship, the debt can be reorganized under chapter 13 bankruptcy instead with a new repayment plan that normally let’s you, the filer, come up with the repayment plan.

Stop Wage Garnishment

When judgments are brought against you by your creditors or collections agencies, one of the many weapons they use to collect payments from you is wage garnishment. This typically means that a percentage of your salary is legally withheld by your employer to send to the collectors. This percentage is not usually something that you determine but it is decided by the collectors and this often creates serious financial complications for the debtor. Filing personal bankruptcy will end of all of this, restoring the full transfer of your earnings directly to you. Early in the process of filing bankruptcy it will be determined whether you’ll benefit from either chapter 7 or chapter 13 bankruptcy, then ultimately the outcome will be that either you get a discharge of your unsecured debts or a rearrangement of your total debts under a new repayment plan, but either way the collectors no longer have the right to garnish your wages again.

Filing for divorce

When you or your spouse file for divorce the marriage may end up with a pile of assets and debts, usually more debts than assets for the average American family. Filing for divorce and dividing up the assets and debts may leave one of you with more than your fair share of debt and not enough assets. Normally you would want to file for divorce first and then file bankruptcy, however it’s best to get a bankruptcy attorney’s opinion on this. Depending on which state you are in, all assets may be considered community property and used in the bankruptcy estate, otherwise only jointly held assets can be used, then individually held assets may be used to pay for the debts inherited after the separation. Bankruptcy law and divorce law are not under the same federal code, so it’s important that you seek professional help to accurately file for both.

Being the victim of identity theft

This is perhaps the worse situation to be in, having your identity stolen, not having the adequate protection to restore your identity and clear your name, bankruptcy can be an option. However, this is only if your disputes are rejected by your creditors and you have no way of proving that the fraudulent charges were not made by you. Depending on how long and how much was charged with your accounts you could end up with a huge collection bill. As a victim of identity theft you have rights and you should contact the Federal Trade Commission, should you become a victim of identity theft and find yourself in a situation where no creditor will entertain your dispute. In this case you should only file bankruptcy if you have no other way to stop creditors from collecting from you and you have no way of proving that your identity was stolen and used by someone else.

There are many other reasons to file bankruptcy and they’re typically very unique to each individual, but the most common reason is still large amounts of credit card and unsecured debt. There are also other reasons that can be beyond your control like the divorce, a death in the family where the primary provider passes on leaving a single parent to provide for children, having your identity stolen and not being able to resolve the fraudulent charges. These are special circumstances but are not that rare.

As always remember that bankruptcy should be your last resort, if you have already exhausted every option and have found no real alternative and no feasible way to come out of debt, then begin your research phase and understand what chapter 7 and chapter 13 are all about and how they can help you. Also take advantage of a free bankruptcy evaluation by simply contacting bankruptcy attorneys in your area or filling out an online bankruptcy evaluation form to get connected with an attorney in your area.

Although the efforts of the federal government to extend relief to lenders and homeowners was more than welcome, the actual results have so far only added to about a half million homeowners in the US being able to rework their loan terms and retain their homes in the first quarter of 2008. Over all the housing relief act has not kept up with the rate of foreclosures across the country.

Over 200,000 homes have already been lost to foreclosures in the first three months of this year. Some of the most affected areas are the states of Nevada, California and Arizona, where real estate prices sky rocketed during the real estate boom that started approximately in late 2000 lasting through 2005 and finally stabilizing in 2006 before beginning a solid decline. During this time investors quickly snatched single family homes and condos in these areas hoping to turn a profit when reselling the homes.

Many industry experts consider the current foreclosure situation an ongoing problem that will not see the bottom of its free fall for some time yet. Loan modifications and homeowner assistance are not benefiting all who could use the help. The State Foreclosure Prevention Working Group (SFPWG) reported their estimations to be that for every 10 homeowners who apply for loan modifications, only 3 are able to get somewhere with their lenders. Also the number of troubled borrowers is increasing each month, more defaults are occurring and neither lenders nor the federal government’s efforts to afford help has been keeping up with the rising numbers of defaults.

Along with the rising numbers of defaults and foreclosures is the number of vacant homes for sale across the country, which is at a record high compared to last year. The housing boom which lasted approximately five years, fueled the rate of new home construction across the west, particularly California. Because this was an unnatural rate of growth, and over valuing of real property, it was only a matter of time before a correction occurred.

Not only are these rescue efforts slow and limited, but the latest activity from Washington where Democrats had proposed a housing package has been met with strong opposition from the Bush administration. The package would provide $15 Billion dollars to buy and rehabilitate properties across the country. The White House opposes the package saying that it is excessive risk of tax payer money.

Also a second bill was approved by the Senate earlier this month that addresses a suite of benefits. Tax breaks would be provided for home builders and other businesses, a $7,000 tax credit for anyone who buys a foreclosed property, a program to counsel borrowers would take $150 million and local government would get $4 Billion to buy abandoned and foreclosed properties.

Because there are so many propositions and plans from many source, the housing relief act has not taken shape well enough and has moved very slowly in the direction it needed to when it was first conceived. It isn’t yet clear what the final action will be and what if any relief will being flowing down to home owners who need help. Also amendments to bankruptcy laws are in the works and we should be hearing news about those before the end of this year. So far it’s been rumored that the changes do not benefit the filers, but the creditors.

For more information on finding ways to modify your existing loan and other default and foreclosure options, review the post about free foreclosure help, in which I talk about a site that was launched not long ago with the only aim being to help homeowners in trouble.

Back in 2002 when I bought my condo, there were no obvious signs to me that what was going on in the mortgage market were the beginning stages of the current subprime crisis. I knew I was making the right decision to buy a place while I could still afford one and I saw how property values jumped significantly in the next two years. However, all along I had this feeling that this rapid growth of the market could not be normal and that it could not possibly benefit everyone. I also figured that at some point I would have to sell my condo and I would most likely want to sell it at fair market and maybe just a tad more.

Would someone really be willing to pay me double the price of what I paid for it a couple years ago? This really puzzled me, and even though I thought it would be great to make that much money, I couldn’t help to feel a little concerned for whoever ended up buying my condo. Would they finance with sub-prime or conventional loans? How will they manage such a large monthly payment? Will they continue to enjoy the market growth like I did?

It can’t grow forever, what goes up must in deed come down, and that’s what we’re witnessing here. It’s a nose dive of a decline for the housing market and it really is difficult to watch. The same thing goes for the stock market, there’s usually a period of aggressive growth that must eventually fix itself. I trade very moderately in the stock market so I keep up with it, but it’s definitely not a huge worry for me.

Though the housing market, which everyone is part of in one way or another, is now suffering from a subprime mortgage crisis, which in turn has an impact on the overall economic growth. As more mortgages default, there’s less confidence in buying homes, and we’re ending up with a surplus of homes across the country, causing a very dramatic decline in new home construction and prices of homes. All of this builds the downward pressure that weighs on the overall growth.

Interest rates on a number of subprime and ARM loans are due to go up through 2008. However, to the benefit of home owners who may be finding themselves on the brink of bankruptcy, the US treasury, backed by US legislators, is enabling the deferment of interest adjustments in order to begin working towards stimulating the economy and re-establishing confidence in consumers and financial markets.

To begin a resolution to the subprime crisis, one of the measures that can be taken in the future through legislation is to limit the numbers of different financial products that revolve around these types of loans and to force revisiting the metrics to qualify consumers for these types of loans. Salaries will need to keep up with inflation and unemployment needs to stay low. Finally, the housing market’s steady decline needs to be interrupted as soon as possible, but this won’t be possible without more aggressive efforts from the US treasury and the government.

Meanwhile, if you’re finding yourself in the same situation that millions of homeowners are in right now, where you’re not making your mortgage payment and considering bankruptcy. You need to know that there maybe alternatives available to you, banks and mortgage lenders are starting to resort to offering their customers loan modifications and or encouraging a short sale. Read more about loan modifications and other free resources here, it may be just what you need to save your home.

Foreclosure is the process in which a lender takes possession of the financed property for lack of payment, with the intention of selling the property to satisfy the defaulted loan. The foreclosure process is ugly and it will leave a mark. By law all lenders must provide sufficient written notices to home owners before starting the process, and what’s considered sufficient will vary per state as well. When the bank’s notices of non-payment go unanswered is when foreclosure comes knocking on your door.

What options do you have?
You could qualify for special forbearance if you have lost your job or your cost of living has changed significantly or you’re experiencing any other financial situation that puts pressure on your ability to pay your mortgage. This is something you’ll have to approach your lender about and you must provide proof of your hardship to qualify.

There is something called a loan modification, which means that the original terms of the loan can be renegotiated and adjusted to fit your new financial situation. Again this will be up to your lender to approve. Lenders are not always sympathetic or understanding so you may need help getting through to them on this option and for that you should check out the free foreclosure help post where I discuss a really good source where you may be able to find the help you need.

The short sale foreclosure is when you try selling the property at a severely discounted price in order to make the sale transaction as quick as possible. If you have equity built up on your home you most likely will lose most if not all of it. You’ll need to hire a good Realtor who’s experienced in these types of sales to help you accomplish this. Most importantly however is that you get your lender to agree to this since it will in most cases mean that the loan balance on the property will also have to be discounted for you to proceed with the sale, meaning the lender loses money as well. Both parties must be in agreement before this can take place.

Another option, is a Deed-in-lieu-of foreclosure, where you voluntarily surrender the property to the lender. This obviously does not help you keep your house, it’s an option you can use when you know you can’t fight it anymore and must give up your home. For the lender to accept this option, you must have tried to sell the house and have attempted other options as well without success. This option can sometimes be beneficial to both lender and borrower, since it immediately releases the borrower from all responsibilities of the defaulted loan and for the lender it can avoid the timely and often costly procedure of foreclosing.

Things to beware about:
Once the lender files a foreclosure notice, this becomes public record. A lot of people access these records often with the purpose of contacting home owners to buy their homes and help them save it.

You must understand that there are people and businesses who make a living off of foreclosures. You’ll probably be approached and contacted by people who say they can help and some of these calls are legitimate but you need to be aware that they’re in for a profit that will most likely leave you short changed.

Since you may be in a desperate situation and you know you can’t save your home, you may be trying hard to save your credit, and often people agree to a deal that may be a temporary fix but are not necessarily good for them in the long run. Some of the most common scams out there are “equity skimming” and entities that post as “counseling agencies”.

Equity skimming consists of you doing a deed transfer of your property to someone who promises to help by selling the property quickly, the often will have you vacate as soon as possible and then they will rent the property to collect payments from that while they process a line of credit on your home then never being heard from again. Unfortunately signing the deed over to someone else will not release you from the responsibility of the loan.

Counseling agencies can sometimes help, but some will do nothing more than collect payments from you. Often times the services they offer are things you can do yourself. You should always deal with your lender directly and when that proves difficult then do research for a legitimate company that can negotiate for you.

It’s difficult to think clearly when foreclosure comes knocking so take some time to think clearly and realize first whether fighting to keep your home is worth the effort. If you feel it is and you want to convince your lender to give you a chance and require professional help, then start by researching companies at the Better Business Bureau and search for “foreclosure consultants”. You’ll get results for agencies who are registered with the BBB and many others who are not. So you want to start with the ones that have a record you can look over.

Last resort
When all else fails, which can happen if your lender is completely unwilling to work with you, you can always go for the last resort, bankruptcy. This is also going to require significant effort on your part to get ready and prepare your documents and contact the right attorney to represent you. Bankruptcy has a more severe effect so it’s important that you take the time to understand what it is, what it does, how to prepare and what to expect. Take some time to read about chapter 7 and chapter 13 since these are going to be the most relevant to someone in a position where they could lose their home.

I guess a lot of people would say that this is nothing more than someone being very negative about what the future has in store for our great state. However, I have seen the effects of the real estate collapse right here in Southern California, and I don’t know why anyone would call it anything else, I think some people are trying to remain optimistic about this especially those who could lose big.

Those who ventured in real estate for investment starting in 2002 to 2003, should have sold their investments prior to 2006 when the market peaked and began its decline. Obviously they would have sold these properties to people who probably could not afford conventional loans on these properties that during that time would have had an average cost of $520,000, so the problem was transferred from one owner to another and any family that bought a home at this price has now suffered a huge decline in value, what’s worse is if these families bought their homes at 100% financing under ARM loans or any other adjustable rate loan they’re going to end up surrendering their homes or in foreclosure.

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It’s really tough to argue with this message and carry on the same way we have been for the last 5 years. If anyone reading and watching this feels optimistic about the current state of the market, please explain why.