Riverside Bankruptcy Lawyers – A lot has been said about how you can avoid foreclosure by negotiating a short sale. Often, when clients come in to speak to one of our Riverside bankruptcy lawyers about how to deal with a possible foreclosure through a Chapter 13 bankruptcy filing, they have already been down the short sale route. There has been a lot in the media about how people in financial difficulty can get out of a bad loan by either a mortgage modification or a short sale. In actuality, the average homeowner isn’t going to qualify, and short sales are full of problems that the average homeowner, or even real estate professional, is not aware of.
Let’s start by looking at the situation of the average homeowner. In our bankruptcy attorney practice, we currently see that about half of the property facing foreclosure is encumbered by a second mortgage, as well as the first. People were encouraged to “take equity out” of their homes, for major purchases, home improvements, or maybe sending a child to college, in the form of second mortgages. And when a second mortgage is involved, both mortgage holders, for both the 1st and 2nd mortgages, must sign off. You need a signed agreement from the holder of the 2nd that they are forgiving the loan. Our attorneys rarely see this happen. This means that even if the holder of the first mortgage agrees, the homeowner is still liable for the balance of the 2nd.
In many cases, internal policies of the mortgage holders do not allow negotiation of the terms, and when more than one mortgage holder is involved the chances of reaching a resolution is almost zero. We have seen clients come into our law offices, who have as many as four mortgages, and are hoping a short sale will resolve their issue. We can tell you, based on our over 30 years as bankruptcy attorneys, it is highly unlikely that attempting a short sale will do anything except waste valuable time in getting our client back on the road to fresh financial footing and stop foreclosure.
As Riverside bankruptcy attorneys, we can offer real solutions. Did you know that a Chapter 13 bankruptcy filing can strip away a 2nd mortgage, leaving you with a payment you can manage? Bankruptcy has the power to put you back in control of your finances, something just pursuing a short sale or trying to get a modification cannot do. And our attorneys will work hard to advocate for you, to get you the best possible financial future. You may not have to sell your home, after all.
If you want to know more about bankruptcy and how it can help you, download our free book, The California Guide to Bankruptcy, to see what a powerful tool bankruptcy can be in retaining your home.
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