One of the biggest Myths out there is that bankruptcy stops foreclosure. It doesn't, it only temporarily delays it. The only way to stop a foreclosure is to pay the loan off, which would be through selling the home or refinancing, or getting a loan modification. So the first course of action that most home owners take is run to a bankruptcy attorney to file bankruptcy to save their home from foreclosure. And as expected, most of these attorneys will simply put these home owners into bankruptcy without explaining all their options in full. For some, bankruptcy is a good option, but it's not for everyone. A good bankruptcy attorney who meets with a client that wants to save their home, will tell them to apply for a loan modification first and then consider a Bankruptcy After.
The reason for this is, if a home owners files for a bankruptcy, then it limits them to only specific Loan Modification programs and when a home owner is facing foreclosure they need as many options available to them as possible. As its not a one size fits all solution.
It wasn't until a few months ago that there are now loan modification programs for home owners that have filed bankruptcy. Bankruptcy should always be left as a last resort option. The recent bankruptcy reforms have made it harder to qualify for a Chapter 7 Bankruptcy, which wipes out all of the consumer debts, so more and more home owners are being forced into a Chapter 13 Bankruptcy, which is a repayment plan.
Statistics show that 66-75% of home owners that file a Chapter 13 Bankruptcy cannot complete the plan, so they end up back into foreclosure without the Bankruptcy protection and now they have a black mark on their credit report and are back at square one. The foreclosure will also continue where the lender left off and put the home owner in a position where they will just want to give up and walk away.
Some bankruptcy attorney's would rather have their clients file a Chapter 13 Bankruptcy because they make more money this way, as the plan goes on for 3-5 years and when compared to a Chapter 7 Bankruptcy, that is more of a one time payment to the bankruptcy attorney. In most cases the people that benefit from a Chapter 13 Bankruptcy is the attorney and the trustee.
Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in Florida FHA Mortgage Loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Florida Loss Mitigation. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://specializedfinancialsolutions.com/lendersexposed.htm or Call 954-678-5796
Article Source: http://EzineArticles.com/?expert=Marlon_Baugh
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