|May 17, 2011|
Previously published by South County Magazine
One in every four home mortgages in America is upside down. That rate is considerably higher in California. Loan modifications seem attractive, but few are funded, and most advertising creates false hope. The American dream for many has become a horrible nightmare. It’s time to stop dreaming, learn the options, and take back control of your finances.
For those that qualify, Chapter 11 or 13 Bankruptcy may be the best form of a loan modification. In both of these, the consumers typically keep their homes, eliminate junior mortgages entirely, and even reduce the amounts on other secured debts like automobiles.
Here’s how these work: years ago, when home values were high, home owners used their equity to borrow against. They took out junior mortgages, leveraging their home equity as a kind of personal ATM. Today however, many of these homes are upside down, meaning the liens exceed the property value. Bankruptcy allows consumers to significantly reduce, if not eliminate, this type of unsecured debt¿often allowing families to remain in their home.
So, what if it’s too late to save your home? Your best bet is to create a combination Chapter 7 Bankruptcy / short sale plan. An experienced Bankruptcy attorney who has a good working relationship with a short sale expert can team up to ensure that you eliminate all of your unsecured debt efficiently, stay in your home as long as is legally permissible (often much longer than foreclosure allows), leave your home without any residual debt or tax consequences, potentially settle unpaid property taxes through negotiation, and even negotiate for client relocation assistance (worth thousands of dollars). The most important element in this strategy is to get you back on your feet and to own again in as little as 2 years!
If you or someone you know is in a bad financial situation with an upside down mortgage, have them speak with a knowledgeable Bankruptcy attorney who is experienced in saving homes and who understands the value of selling short rather than allowing your home to go into foreclosure. It will make a world of difference to your financial future!