Explaining Your Alternatives to Foreclosure
With home foreclosure rates at enormous levels across the country, there has been much public discussion about short sales and workouts as tools for avoiding foreclosure. Unfortunately, people who try to negotiate with their mortgage lenders without the help of experienced attorneys often end up agreeing to things that are not in their best interests.
At the Law Offices of Scott R. Schneider, I help New York clients understand the short sale and workout processes and how these negotiated options differ from the legal protection of bankruptcy. Contact me to schedule a free initial consultation at my offices in Hicksville.
Comparing a Short Sale to Bankruptcy Protection
Short sales are one option for people who owe more than their homes are currently worth and are willing to give up their houses in order to avoid sinking more money into them. In a short sale, the lender agrees to allow the borrower to sell the house and pay off the mortgage with the proceeds from the sale.
It is important to understand that just because your bank is discussing a short sale with you does not mean they have agreed not to go ahead with foreclosure. While you are negotiating, the bank could be preparing for foreclosure.
Another risk of a short sale is incurring more debt. In some cases, banks write off their losses from short sales, but in other cases, they require borrowers to sign promissory notes agreeing to eventually pay back the difference between the sale price and the mortgage debt.
The banks have experienced lawyers on their side. Before attempting to negotiate with them, consult with your own lawyer, and consider whether Chapter 7 bankruptcy is a better option for you.
Understanding Loan Modification Workouts
If you want to keep your house but are having trouble catching up with late payments, your bank may be willing to work out a loan modification agreement. However, like short sales, workouts are voluntary for lenders, and your bank could be preparing for foreclosure at the same time it is negotiating with you.
You should also be wary of debt consolidation agencies that claim they can negotiate with your mortgage company on your behalf. Lenders are not legally required to listen to or work with these companies.
They must, on the other hand, cooperate with the bankruptcy courts, and Chapter 13 bankruptcy may offer you the protection you need to keep your home. Contact me to discuss your full range of options.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
