Loan Modifications vs. Bankruptcy
Our Kansas City Foreclosure Attorneys Fight Home Foreclosure
Your home is where you go to feel safe, but what if something, such as your ability to afford your home, is threatening this feeling of safety? Homeowners in this situation have only a few options they can pursue to avoid foreclosure and losing their homes. The Sader Law Firm offers legal counseling and guidance to individuals and their families going through tough times. We commit to helping you stay in your home.
Before agreeing to a loan modification, speak with a qualified attorney to learn if you may have better financial options to save your home and become current on your mortgage.
Are Loan Modifications Good?
One way loan lenders attempt to assist those struggling with their monthly mortgage payments is to modify the original loan agreement. On the surface, this seems to be a good option. However, there are many strict guidelines and fine print terms and conditions associated with loan modifications. Ask yourself the following questions to see if a loan modification is right for you:
- Can you afford the new payments? Lenders will consider your debt-to-income ratio when determining your ability to afford the new mortgage amount. If you have debt other than your home, such as a car or student loans, you may not qualify for a loan modification.
- Are you behind in your mortgage payments? Consideration for a loan modification is often only possible if you are currently behind in your payments. For this reason, many homeowners intentionally stop paying their mortgages to qualify and request a modification. Due to a backup of modification requests, it can take months for your case to be considered. If, at that time, you receive a denial for a loan modification, you may then face a huge arrearage. The bank can then deman you pay in full. If you cannot afford to pay the arrearage, the bank may attempt to foreclose on your home.
- Is the loan modification fair? While your new mortgage amount may seem lower, other contributing factors may ultimately make the loan modification more expensive. This includes a longer period of payback, the payment of additional interest, the fact that modification may end after a short period as well as new loan costs and fees tacked onto your principal balance.
Can Bankruptcy Save My Home?
Our firm strongly believes that bankruptcy can be an effective tool for protecting your assets. This includes your car and home. In our more than three decades of legal experience, our bankruptcy attorneys have assisted homeowners wanting to avoid foreclosure of their homes by filing for Chapter 13 or temporarily with a Chapter 7 bankruptcy.
We see our clients benefit from a Chapter 13 bankruptcy in the following ways:
- Quickly stops foreclosure sales on homes… as long as you file it even one minute before the scheduled sale
- There is no need to be behind in mortgage payments to file for bankruptcy
- A monthly payment plan is set up that ranges from three to five years in duration
- Other unsecured debt, such as credit cards, will be included in the plan and can be discharged through bankruptcy, if eligible
- There is special treatment available for second mortgages in Chapter 13 that can reduce or even eliminate payment of those debts in certain circumstances
Talk With Foreclosure Lawyers about Your Best Legal Options
We understand what may be the best option for one person may not be the best option for you when it comes to saving your home from foreclosure. Our firm wants to see you financially succeed. We can support you throughout this endeavor.
The Sader Law Firm makes bankruptcy law its central focus. With experience helping individuals file Chapter 13 bankruptcy, Chapter 7 bankruptcy in addition to assisting businesses needing to file Chapter 11 bankruptcy, our firm knows what it takes to get back control of your finances. Call our attorneys that handle foreclosure defense today to learn more about legal representation for your case.