Peter Francis Geraci A Bankruptcy Blog - Chapter 7 & 13

The list of failures by the government for mortgage help continues to grow. Applicants are constantly denied and the requirements for are as stringent as a Harvard application.  Trusting the government to protect your home could lead you into foreclosure. Homeowners need to prove at least a 15% deduction of income and are ultimately denied.

Clients of Peter Francis Geraci do not lose their home unless they want to. Once the foreclosure judgment is entered, a loan modification is meaningless – a bankruptcy filed with Geraci Law will stop the foreclosure! Some Geraci clients are also able to strip their second mortgages. It’s the best modification you can apply for!

There are hundreds of advertisements about refinancing before rates go up again. Some offer rates as low as 4%! Good luck. To refinance a home, you need to have paid down some of the principal balance. If you did not put down at least 20 percent on your mortgage, there is a very small chance you’ll be able to refinance for a lower rate.

So without paying down the principal balance and with home values steadily dropping, the 4% rates offered are as likely as a loan modification. Your best option is to file a bankruptcy with Peter Francis Geraci and his bankruptcy attorneys in Illinois, Indiana and Wisconsin.

Whatever you are paying in minimum payments each month is money you can put toward paying down your mortgage. You are able to put more money toward the principal. You can actually work on reestablishing your credit by making timely payments not taking on more debt.

A man came into Peter Francis Geraci’s Crystal Lake office and met with bankruptcy attorney Jason Nielson. Like so many people, he was laid off from work and fell behind on his mortgage payments. He applied for a loan modification through his mortgage company. He was denied a lower mortgage payment and help from his financer.

The client returned to work and could afford the house but not the arrears. His house was to be sold at a sheriff sale the following day. His mortgage company refused help so he called Peter Francis Geraci.

Illinois bankruptcy attorney Nielson met with the client drafted his paperwork and filed a Chapter 13 bankruptcy petition the same day. If you have a sheriff sale or are in foreclosure, Peter Francis Geraci attorneys can help you save your home. 

A Peter Francis Geraci Law client wanted to file a Chapter 7 bankruptcy to eliminate his unsecured debt and attempt a loan modification. His modification failed and his mortgage company filed a foreclosure. A sheriff sale order was entered in case. The client met with Geraci Attorney Frank Hernandez and his case was converted to a Chapter 13.

Geraci Attorney Jill Luetkenhaus filed the client’s case and the sheriff sale was stopped. The client said Peter Franci Geraci and attorneys saved his life. Without the help of Geraci Attorneys, the client would have lost his house. Loan modifications are blinders, if you want to keep your house call Peter Francis Geraci. You can meet with experienced attorneys like Herandez and Luetkenhaus to get the best option to get out of debt.

Are foreclosure rates dropping?  Yes. What does that mean for you?  Nothing.  If you are behind, you are behind.

The Mortgage Bankers Association reports 6.3 million mortgages over 30 days past due.  If you are waiting for loan modification, keep dreaming.  Peter Francis Geraci of Geraci Law LLC says:  “Our clients are doing something about past due mortgages.  They are filing Chapter 13 repayment plans and working on their modification during the Chapter 13.  That lets you control your debt, and gives you added leverage with the mortgage company.  It is a little known secret that if you file Chapter 7 or 13, banks will work with you just as before, and your chances of success may be better.

The longer you wait to be proactive on your home, the further you get behind. In a Chapter 13, you are able to spread the back payments into a 3-5 year repayment plan. The farther you are behind, the higher the payment is going to be. Be ahead of the curve and call  Peter Francis Geraci Law in Illinois Indiana and Wisconsin for a Chapter 13 Debt Repayment Plan to stop foreclosure, and get your mortgage current, for as little as $274 to file in as little as one day.

Deed-in-Lieu of Foreclosure

A deed-in-lieu is an agreement between you and your mortgage company to transfer the deed in exchange for release of mortgage obligations.  Your mortgage company will not receive any proceeds because the home is not being sold.  Instead the deed to the property is being transferred back to them. Your mortgage company will NOT offer a deed in lieu-of-foreclosure if they think you can make your payment. Before consideration, you will be asked to provide bank statement, paystubs, and years of tax forms.

Foreclosure

If you cannot afford your home, if you do not expect to return to work in the next twelve months, and if you do not want to keep your home – stop paying your mortgage. You will lose your home eventually but you will lose your home anyway with the previous options.  A foreclosure can up to 20 months. You can save money on rent and stay in your home, rent-free! The money you will pay in association dues and insurance will probably be significantly less then rent.

If you want to save your home, look at a Chapter 13 bankruptcy. A Chapter 13 will stop the foreclosure process and allow you to repay the arrears in a 3-5 year repayment plan. If you are underwater on your first mortgage and have a home equity loan, you can possibly strip the second in a Chapter 13!

There is a moment when you realize you cannot afford your home anymore. It may happen when you lose your job or hours are cut. Or when you check your savings account and there is nothing left over. When you come to the realization, it is important to understand your options.  So begins the what to do with my house guide…

Loan Modification

The original purpose of loan modifications was to help an estimated 3 to 4 million homeowners save their homes.  According to a report done by the Office of the Special Inspector General for the Trouble Asset Relief Program (SIGTARP), only 168,708 permanent loan modifications have been approved.  This is a year after the program!

Loan modifications can take months. If you have lost your job and your only income is unemployment, a loan modification will not work. You can call your mortgage company about working with you while you’re unemployed. But understand, unemployment does not count as income. Unemployment can run out (in approximately 2 years) or change. It is not a long term solution for your or your mortgage financer.

Bankruptcy will not modify your loan.  But if you have other debt, you can file a Chapter 7 to eliminate the other bills and free up money to pay your mortgage. If your mortgage payment is $850 and you pay $600 per month in minimums – a solution is discharge credit card debt and use $600 to pay your mortgage!  Eliminating the debt-income ratio issue could also help you with a loan modification application in the future.

There is no harm in applying for a loan modification. You could be one of the few who is accepted. It is crucial to understand loan modifications are NOT guaranteed. It is up to your mortgage company to modify your loan. A bankruptcy discharge is!

Short Sale

A short sale is an agreement with your mortgage company to sell your home at less than what is owed.  Short sales like loan modifications are long, tedious and strenuous processes. More often than not, the short sale falls through and you still go into foreclosure.  

It is not as simple as the ads and the flyers you receive from realtors.  Understand you are asking the bank to take a loss on their investment. Before the bank agrees, you will need to provide bank statements, tax returns and other financial documents. Your financer wants to make sure you have no other means to pay your mortgage.

A short sale can still destroy your credit report. A deficiency meaning the difference of what you owe and how much the home is sold for. If the deficiency is reported to the credit bureau, it would show as a settled debt.  This is still negative! Not to mention, you could receive a 1099-C during tax season. You would pay tax on the deficiency.

If your credit is going to plummet anyway, why leave your home early? An average foreclosure takes 20 months – why not stay RENT FREE at your home? Let the property go through foreclosure, if there is a deficiency call Geraci for a bankruptcy. Mortgage deficiencies are dischargeable debt!

My grandmother reads the financial section of the paper for anything related to debt and bankruptcy. Apparently after weeks of research, she came to the conclusion that articles about foreclosure do not mention bankruptcy.  I saw her recently and was given a stack of news articles related to foreclosure help and she was right. Not one journalist thought to contact a bankruptcy attorney as a source.

Most of the articles are wishy-washy and talk about contacting your mortgage company to ask for a loan modification. A particular favorite was the Chicago Tribune’s “Taking the Fear out of Foreclosure.” The author tells homeowners not to worry and there is help available. I do not think the author is behind on their mortgage because homeowners should worry!

Once a foreclosure judgment is entered, crossing your fingers will not save your home. It’s time to be proactive and look at ways to actually protect yourself and your property.

In the “Taking the Fear” article, the author writes, “Even years into the housing crisis, they still don’t have the manpower with the training and experience to handle the onslaught. So be patient – and keep trying and trying to reach your lender.”

This would be wonderful advice if there was no such thing as foreclosure. The more patient you are and the more you try to reach your lender, the more you get behind on your mortgage payment.

Another popular tip from the news media is to apply for a loan modification.  If you know anyone who has applied for a modification, then you understand it is not the seamless process portrayed by the media.

Loan modifications are rarely successful. Mortgage companies want current documents and will routinely deny modification applications if the most recent paystub is not sent in.  On average, a definitive answer will take at least eight months. Its eight months to get caught up on if you are denied for a modification.

More often than not, the people I speak to can afford their regular monthly mortgage payment. It is the thousands of dollars in late fees and penalties that they struggle to get current on. These people should be reading articles in the Trib about the wonder of a Chapter 13 bankruptcy.

A Chapter 13 will STOP the foreclosure. I do not want to provide the vague, useless information that most of these articles provide. If you are in foreclosure and you can actually afford your mortgage, then file a Chapter 13.

A filed case with an experienced law firm like Geraci Law will prevent the same ol’ song and dance of deferred payments and forbearance agreements.  If you were denied for a modification and receive the disheartening alternatives to foreclosure packet, do not feel defeated. A Chapter 13 will save your home.

The housing bubble is going to burst – again. The big difference is the housing bubble is a foreclosure bubble. With the foreclosure rate slowing and the unemployment rate (in many states) rising, the burst is bound to happen soon.

Foreclosure rates could be slowing for numerous reasons. The biggest reason probably is the scrutiny of mortgage companies’ foreclosure process.  A person used to lose their home after being delinquent for 6-8 months. Now, it could take up to a year (s) for a homeowner to actually be evicted.  Mortgage companies are required to provide HAMP options and in some counties, mortgage counseling services before a foreclosure judgment can be entered. In some cases, a homeowner could be behind 9 months before being contacted by a foreclosure attorney.

The decrease in the amount of foreclosures filed does not mean there are fewer homes in trouble – it means there are more delays by banks to actually take homes. A loan modification application can delay a foreclosure for months (in some cases years). A mortgage company cannot foreclosure on a property without offering a HAMP modification opportunity and the backlog of applications and homeowners with arrears could delay even the most efficient of foreclosure attorneys.

This is seemingly good news for struggling homeowners who can stay in their homes until they return to work (and file a Chapter 13 to get caught up on the arrears) or find a new living space. But at some point, the foreclosure bubble will burst and many will find themselves with an expedited foreclosure and a pending sale date.  This happens often after a loan modification is denied. After months of faxing, e-mailing, and mailing the same documents to a mortgage company, a homeowner could find a summons for foreclosure on their front door.

It is easy to ignore the collection letters and the notices – even when the notice is being handed to you by a process server. Since foreclosure generally takes over a year, a person can gather a hefty amount of mail from mortgage companies and attorneys. I have heard people say, “My mortgage company told me if I want a modification I should not make my mortgage payment.” The answer is your mortgage company is suing you because you are going into foreclosure! A loan modification can be denied and the default amount, late fees, court costs, and interest can add up to a substantial amount. At this point, your mortgage company is probably done working with you. Often, your mortgage servicer will demand the entire amount to stop the foreclosure proceedings.

Checking and actually reading your mail is important – especially if you want to save the house. Once the foreclosure attorneys get their ducks in a row, the number of foreclosures will start to match the increasing number of people with defaulted mortgage payments (in Chicago, the number of defaulted mortgages increased from last year, while the number of filed foreclosures decreased 20 percent).

Once the foreclosure attorneys work out the backlog, I predict there will be a storm of foreclosure filings and sheriff sale dates. You are able to stop a foreclosure sale by filing a Chapter 13 bankruptcy before the home is auctioned off. If your home is already sold, your Chapter 13 bankruptcy option is gone. Do not wait until the last second – contact Geraci Law LLC. If you have waited until the last second, Geraci Law can file your case in as little as a day to save your home.

A new mayor took office in Chicago this week and has some ambitious plans to curb the effects of foreclosure. Mayor Rahm Emanuel in the 2011 transition report called for the mortgage providers to develop a strategy to prevent foreclosures. In the report, the new mayor demanded an inventory of abandoned buildings and to invigorate older foreclosure programs.

Current foreclosure prevention programs are available to Chicago residents including foreclosure counseling available through HUD-approved agencies. In 2010, the city sponsored “Fix Your Mortgage” events (using $1 million in stimulus funds) and helped over 2,200 homeowners with foreclosure. The report does not indicate whether the homeowners kept their homes or vacated the property.  According to the Department of Housing and Urban Development (HUD)’s Web site, the events help homeowners find out if they are eligible for a HAMP modification. 

The 2,200 homeowners pale in comparison to the 25,000 homeowners with a foreclosure filed in 2010. The success rate of the event is pretty comparable to the national success rate of loan modifications. Many people who apply do not qualify from the onset and despite submitting documents for a modification – a foreclosure is still inevitable.

So the success rate is pretty terrible in the Chicagoland area.  The national mortgage deficiency decreased last year and Chicago’s increased! According to the Chicago Tribune, approximately 7.75% of Chicago homeowners are at least 60 days behind on their mortgages – compared to the national average of 6.19%.  The city is helping a minimal percentage with counseling – but what if you are in foreclosure? What if you want to save your home? These questions do not seem to be answered by the counselors or a loan modification application nor the 22,800 other people faced with foreclosure last year.

A foreclosure crisis is not going to be curbed by housing counseling. Most people do not find themselves in foreclosure because they never had housing counseling – most people fall behind because of loss of income, high amounts of debt, or they were never able to afford the house to begin with. Counseling a person on the foreclosure process is not going to help them save their homes or retain homes years from now.

Bankruptcy is the way to do so. A chapter 13 is a repayment plan – through the federal court – allowing a person to catch up on mortgage arrears.  Depending on your individual situation and value of your home, a chapter 13 could eliminate your second mortgage. How’s that for a modification? You could pay back a small percentage of what you owe to unsecured creditors (i.e. credit cards, medical bills, etc.) and eliminate your second mortgage. If you can afford your home, Geraci Law, LLC can help you save your home.

If you cannot afford your home, if you could never afford your home – counseling is not going to help. You are able to apply for a loan modification; however the major mortgage servicers do not consider unemployment to be income.  Often, an unemployed person will apply for a modification only to endure years of “we lost your documents” or “it’s been transferred to someone for review.” If you are receiving unemployment with few job prospects, the probability of you qualifying for a loan modification is almost nonexistent. 

Again, a bankruptcy could help you. A chapter 7 bankruptcy would eliminate all of your other debt including medical and credit card debt and protect you against a mortgage deficiency (if one were entered).

Good luck to our new mayor. He was elected to a difficult position in a city where mortgages are falling further and further behind. Mayor Emanuel governs an entire city – as an individual you need to look at what is best for you. If you want to save your home, contact Geraci Law, LLC to find out your best option to get out of debt.

In this current housing market, the word foreclosure is becoming as popular of a dinner conversation as which celebrity is going to rehab this month.  Foreclosure (and bankruptcy) is not as taboo since you probably have a neighbor or a family member facing the big f-word.

Once most families hit the 90^th day of arrears (when most mortgage companies start reporting to the bureaus), most start thinking about whether the home is worth saving.  You think your children grew up at the home but you owe $250,000 and the house is worth $150,000.  So let’s look at some options to look at the big financial picture

Option 1. You want to save the house. You have invested too much blood, sweat and tears to let the house go and you are about even on what you owe and how much the home is worth.  But you are a couple of payments behind, your mortgage company has stopped returning your calls and you can afford the house.  Affording the house is key – you need to be able to make your mortgage payment and be able to buy food, water, gas, etc. So, you file a Chapter 13 bankruptcy. A filed Chapter 13 will stop all foreclosure proceedings and allow you to spread out the arrears of your home in a 3-5 year repayment without the crazy penalties imposed by your mortgage company.  You can save your home up to the day of the sheriff sale with a filed Chapter 13 bankruptcy.

Option 2.  You cannot afford your home because of a home equity loan you took out a couple of years ago. So now, you have a first mortgage payment with a balance of $250,000 and a second mortgage with a balance of $50,000 and your home was recently appraised at $200,000. You are able to make your first mortgage payment but live off of credit cards in order to stay current with your second mortgage. It is possible to strip the second lien – meaning you file a Chapter 13 bankruptcy consolidate the credit card debt and at the end of the repayment plan the balance of the second mortgage could be eliminated. Now, there are no guarantees here and you would need to meet with an experienced bankruptcy attorney to possibly get rid of the second mortgage.

Option 3: You cannot afford the house but you cannot afford to move quite yet.  Maybe there was job loss or an income reduction but you are choosing between food and your mortgage payment each month.  You have tried working with your mortgage company and the idea of a loan modification is laughed at by your lender. The silver lining is foreclosure takes time – stay at the house, keep it insured and you have free rent. Think about it – the $1500 mortgage payment you are struggling to keep current each month could go toward getting back on your feet. The average time foreclosure takes 17 months. You have 17 months of free rent – that is $25,500 of mortgage payments that could go to getting yourself back on stable financial ground. Your bank took advantage of you so why not take advantage of the bank. I constantly get asked about the morality of staying in a home rent free. My answer is – is it moral for a bank to give you a $350,000 mortgage loan with zero money down when your annual income is $30,000?

Deciding the future of your home is not an easy decision. When you are faced with financial hardship, it is difficult to stomach the loss of an investment. But what are you supposed to? Geraci Law, LLC are professionals at saving homes or providing legal resources to homeowners struggling with mortgage payments.