In April 2012, a $25 billion settlement was reached between several major banks and 49 states concerning abusive foreclosure practices. With the settlement now in place, these lenders have resumed foreclosure actions. According to a recent study, foreclosure activity for May 2012 reflected a 9.1% increase from the previous month. If you are behind in making your house payments, your lender may begin foreclosure proceedings. If you have a second mortgage, it may be possible to eliminate that debt altogether depending on the value of your home. If you are one of the thousands of homeowners facing foreclosure, there are options available to deal with the debt.
If you received a Notice of Trustee’s Sale, you can still save your home by filing a Chapter 13 bankruptcy. Some people are afraid to file bankruptcy believing it will devastate their credit. But chances are if you are behind in your mortgage payments you are probably behind on other debts as well and your credit may already be in bad shape. A Chapter 13 bankruptcy allows you to pay the past due mortgage payments over a 36-60 month period, with no interest.
Some homeowners are behind on both their first and second mortgage payments. In that case, bankruptcy may allow you to catch up on the first mortgage payments and eliminate the second mortgage. A Chapter 13 bankruptcy allows the second mortgage to be voided or “stripped” from the property and treated as an unsecured debt. However, this is only possible if the value of the property is less than what is owed to the first mortgage lender. If you are in this situation, you may not want to wait too long to file a Chapter 13. Based on recent data released by CoreLogic, metro Phoenix home values are skyrocketing at the fastest rate in the nation. In the Phoenix, Mesa and Glendale markets, housing prices jumped 14.7% in May compared to the same time last year. With rising home prices, you may be unable to strip off a second mortgage if you wait too long to file a Chapter 13.
If you are one of the thousands of homeowners with past due mortgage payments you may still be able save your home and possibly strip off any second mortgage. Call me at (480) 833-1113 for a free consultation to find out if a Chapter 13 bankruptcy will help you catch up past due payments and stay in your home.
Attorney Profile: Janet Spears, Bankruptcy Lawyer