Michigan Mortgage Foreclosure Prevention Lawyers
When it comes to your credit rating, a home foreclosure will be more damaging to your future than a bankruptcy filing. A home foreclosure may prevent you from getting mortgage financing for three to four years; a bankruptcy filing may interfere with obtaining a mortgage for one to two years.
You should know about Michigan's new law, requiring notice to the homeowner among other things. Reasons for the foreclosure must be communicated, along with the amount due, and a list of local housing counselors, etc. We will be glad to explain how the law may affect you.
Whenever possible, avoid home foreclosure. One of our qualified Attorneys can review your options for obtaining a fresh start under a Chapter 7 to preserve your credit and eliminate other unsecured debts or for filing a Chapter 13 reorganization to stop the foreclosure sale and set up repayment terms with your lender while reorganizing your debts, removing home equity loans and second mortgages, etc.
Contact a bankruptcy attorney at Acclaim Legal Services today. We will help you find the best option for protecting your home and your future. Since we opened our doors in 2003, we have helped more than 7,000 people find a fresh start.
The Benefits of Bankruptcy in Preventing a Home Foreclosure
Chapter 7 bankruptcy: If you are current on your mortgage payments and your home is not worth much more than what you owe on your mortgage, you can normally file a Chapter 7 bankruptcy and keep your home. If you are facing foreclosure and can no longer afford to maintain payments on your home, filing a Chapter 7 prior to the foreclosure sale will avoid a foreclosure listing on your credit and eliminate any debt or obligation resulting from the foreclosure.
Chapter 13 bankruptcy: If you are behind on your mortgage, you may be able keep your home by filing a Chapter 13 bankruptcy, which allows you to resume monthly mortgage payments and pay the missed payments over time. The initial filing of the Chapter 13 will immediately stop the foreclosure sale and initiate repayment terms. We will spread the missed payments out over a 36-60 month time period at 0% interest. We will also defer and potentially reduce other bills, such as credit card, medical bills and personal loans, until you are caught up on the home mortgage.
Preventing a Foreclosure by Removing a Second Mortgage or Home Equity Loan
If you have more than one mortgage on your home and now find that you owe more than your home is worth (an upside down mortgage), you still have options. We may be able to help you avoid foreclosure by removing the second mortgage or home equity loan through "lien stripping" under a Chapter 13 debt reorganization plan.
Lien stripping converts the second mortgage to unsecured debt. A portion of the unsecured debt may be eliminated during the bankruptcy proceeding and the interest rate will be reduced to zero percent interest. All payments to unsecured creditors are deferred until you are caught up on your payments to secured creditors. To see if you would qualify to have your second mortgage or home equity loan stripped, please consult one of our qualified Michigan bankruptcy attorneys
Other Foreclosure Prevention Options
- Negotiated Forbearance Agreement: Your mortgage company may agree to set up a repayment plan to allow you to become current on your mortgage payments. These agreements can be rigid and usually the mortgage company wants a large payment over a much shorter period of time than a debt reorganization under Chapter 13 would require. However, for some families, this can be an alternative to bankruptcy. We typically don't recommend borrowing from your 401k or family members, as this creates new debt obligations and unintended tax consequences.
- Loan Modification: Some mortgage companies will allow a homeowner to add missed mortgage payments on to the end of their mortgage contract. Loan modification extends the term of the mortgage and increases the amount of the loan over the life of the loan, but it is usually easier for a homeowner to manage. Additional fees or an increased interest rate may be applied as well. We recommend that you get the new terms of the loan in writing and review them carefully with an experienced attorney before making the agreement.
- Deed in Lieu of Foreclosure: The bank may agree to take a home back without going through foreclosure, sparing you the negative impact of foreclosure on your credit rating. However, preventing a foreclosure with this option can have negative tax consequences.
- Short Sale: In a short sale the mortgage company allows a homeowner to sell the home to a third party for less than the amount owed on the mortgage. This is an important option if your home has depreciated and is now worth less than when you purchased it. The homeowner may have a tax liability for the value of the amount of the mortgage that the bank "forgave." Some banks will not allow a short sale.
Preventing Home Foreclosure
Contact the foreclosure prevention lawyers at Acclaim Legal Services to discuss your options to avoid foreclosure through personal bankruptcy. We have offices in Southfield, Flint, Dearborn and Warren, Michigan. Call 866-438-5217.
