Do you need to file bankruptcy to stop a foreclosure sale date?

Most homeowners feel the only way to stop a trustee sale date is by filing for bankruptcy protection, but that is not necessarily the case. Most attorneys will advise their clients they must file bankruptcy to stop a trustee sale because they do not have the staff or long standing relationships with mortgage servicers to postpone the sale without filing bankruptcy. That is not the case with The Feldman Law Center. Our experience gives us options for our clients that other firms simply do not have. Our attorney and legal staffs experience and relationships give our firm the ability to contact the lender, fax our client’s financial information, and postpone the trustee sale for 30-60 days right over the phone, before simply filing for bankruptcy protection. This process allows our attorney’s the proper time needed to negotiate a loan modification that’s reasonable and will help our clients keep their home. In most instances, loan modifications offered to homeowners in default are nothing more than an unaffordable forbearance agreement, thus forcing most into bankruptcy at the eleventh hour to stop the sale of their home. This is not the only option available, but the common practice of most real estate and bankruptcy attorneys. Obviously, homeowners want options and must have the ability to make a reasonably modified payment for the attorneys to negotiate a loan modification. In many cases, when a property is upside down in value and our client has a 2nd mortgage, we find that after getting a loan modification on a first mortgage, that a seeking relief through a chapter 13 bankruptcy can strip the 2nd lien. This form of “principal reduction” helps clients regain the equity they lost in the real estate downturn and may drastically reduce their mortgage balance and mortgage payments. For instance, in one case a client was able to strip a 2nd lien in the amount of $350,000 on a property now worth $900,000. The home was originally valued at 1.2 million with a 1st trust deed of only $750,000. In utilizing this combination of loan modification followed by a chapter 13 bankruptcy, when the California real estate market rebounds, so will our client’s equity. These days homeowners need to employ all resources available to them to restore normalcy to their lives. Many California residents facing foreclosure have had their credit scores suffer due to delinquent mortgages and credit card bills. In most cases a bankruptcy offers them a fresh start and an opportunity to restore their credit rating in due time. The very last thing someone wants on their credit history is a foreclosure making it nearly impossible to purchase a home in the next 10 years. Filing a chapter 13 bankruptcy will give someone the opportunity to restructure their debt and repay a small percentage of their secured and unsecured debt over time, typically 3 -5 years. Additionally, a chapter 13 may actually eliminate a 2nd mortgage lien as well. Filing for chapter 7 bankruptcies may allow one to completely eliminate their debt and get their life back on track and start restoring their good credit. As long as the 1st mortgage is brought current, clients can keep their home and eliminate much of their unsecured debt. There’s no “one size fits all” answer for financially challenged homeowners. Everyone has a different and unique situation. Our legal approach is proven and result driven. Whether our clients want to keep, sell or walk away from their home we can help. In addition to bankruptcy and debt settlement information, our law firm can negotiate a loan modification, short sale or cash for keys. Please feel free to contact us for a free consultation and explore all your options.