Bankruptcy Offers Hope to Those Struggling to Make Their Mortgages

Submitted by Jen Jones on Fri, 11/12/2010 - 12:36pm

Bankruptcy Offers Hope to Those Struggling to Make Their Mortgages

As has been well reported, mortgage modifications in the current housing market remain hard to come by. But what is less well known is that even for many lucky enough to modify their current house payments, the financial future is far from safely sheltered.  According to a recent report, more than 50 percent of homeowners who received mortgage modifications were at least two mortgage payments behind within a single year’s time, yet again making them vulnerable to perils of foreclosure.  The report also showed that approximately one-third of homeowners who received mortgage modifications that reduced their monthly payments by 20 percent or more had fallen behind again within a year compared to 60 percent for borrowers whose loan payments were left unchanged or increased.

This news coincides with the findings of a recent survey showing that more than half of Americans are worried about not having enough money to pay their mortgage or rent. One in three people surveyed revealed they were “very concerned” about their ability to make their mortgage each month; an additional fifth were “somewhat concerned,” totaling 53 percent of all respondents. By contrast only 37 percent of those surveyed said they were at least “somewhat concerned” about making their housing payments in 2008.

The results of these facts and figures shed light on a lingering problem in today’s economic malaise: while the goal of mortgage modifications it to reduce the number of total foreclosures, more and more homeowners are behind (or worried about becoming behind) on mortgage payments despite ongoing efforts to the contrary. As a result, without significant reductions to monthly mortgages payments, more and more homeowners will face the loss of their biggest assets.

These fears are coupled with a real lack of understanding of how the nation’s financial instability is affecting the ability of real Americans to keep a hold on their “home sweet homes.” Even as politicians themselves use the safe havens provided by bankruptcy, they preach to their constituents about the perils of avoiding personal responsibility and falling behind on debts. As a result, Congress not only avoids making real changes in the mortgage modification process and/or significant changes in how homeowners are charged for homes worth less now than when they were purchased, but also ignore the benefits that bankruptcy provides. The outcome then is that modifications alone can’t solve the housing problem with few willing to talk about alternatives to foreclosure.

Fortunately, where one system is failing, another can fix these financial woes, in the form of personal bankruptcy. Bankruptcy allows beleaguered homeowners to avoid having to choose between their credit card and medical bills and keeping a roof over their heads. Under a Chapter 7 bankruptcy, you can find relief from the prospects of foreclosure by dissolving unsecured debts and creating space to save for your current home or one more well-suited for your post-recessionary budget, as long as you go into Chapter 7 current on all your house payments. In Chapter 13, you can reorganize your debts, allowing you to hold onto your home and discharge debts in under five years.  Chapter 13 also allows you to catch up the arrears on your mortgage or mortgages over 5  years while making the ongoing monthly mortgage payments.  Chapter 13 can stop foreclosure dead in its tracks.

In turn, as thousands of American homeowners search for more immediate and steady help to stay in their homes, many are turning to bankruptcy to stop their own real estate recession. If you too have been effected by the economic crisis, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your landlord, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation. Just call toll free to +1-919-646-2654, or make your own appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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