Can I keep my house after bankruptcy?

The short answer is yes, but you must be able to make the payments.  In general, a Chapter 7 bankruptcy is not going to order a debtor to move out of their home.  The bankruptcy is not going to remove a debtor’s name from title to their house.  The only effect the bankruptcy will have is to discharge the debtor’s personal liability to repay the loan.  The bank (or lender) retains the lien (a.k.a. the deed of trust) against the property.  If the debtor does not or cannot make the payments, the bank will foreclose.  If you have late mortgage payments at the time you file a Chapter 7 bankruptcy, you will still have to come current on the payments either by paying the past-due amounts (the “arrearages”) or by negotiating a loan modification with the lender.

In Chapter 13, if you want to keep your home and you have late mortgage payments, you propose a Chapter 13 repayment plan that pays off the late mortgage payments over 36 or 60 months.  During this time, you also make the monthly mortgage payment.  Depending on which district you file in (i.e., the Eastern District of California), will determine whether you pay your monthly mortgage payment directly or whether you pay it though your Chapter 13 plan.

Modesto bankruptcy attorney Brian Haddix can explain and advise you as to what option is best for you.

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Flawed Foreclosure Documents Thwart Home Sales

The slowdown in foreclosures by banks appears to be creating a whole new set of problems, according to an article in today’s New York Times.  “This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.

With the sudden halt of foreclosures, new buyers who were in the process of preparing to move into foreclosed homes now find themselves in limbo.  Amanda Ducksworth was supposed to move in to her new home this week, a three-bedroom steal here in central Florida with a horse farm across the road. Instead, she is camped out with her 7-year-old son at her boss’s house.

Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.

There has been no foreclosure halt in California – yet.  But some in government, including Nancy Pelosi, are calling for an investigation into foreclosure fraud.

If you are facing foreclosure, you should call Modesto bankruptcy attorney Brian Haddix for a FREE BANKRUPTCY CONSULTATION


Bank of America Halts Foreclosure Cases

Bank of America has temporarily frozen all foreclosures as it examines whether it rushed the foreclosure process for thousands of homeowner’s without reading the documents.  In an e-mailed statement, Bank of America said it would “amend all affidavits in foreclosure cases that have not yet gone to judgment.”

The reason for the halt stems from a document obtained by the Associated Press which  shows a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month without reading them.  The official, Renee Hertzel, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month and typically didn’t read them.  Bank of America is the third bank behind GMAC Mortgage and JP Morgan Chase to temporarily halt mortgages.

The trend is troubling, to say the least.  At best it demonstrates sloppy legal work by the law firms hired by the banks – law firms that no doubt charge the banks hefty fees – a cost the banks no doubt eventually pass onto their customers.  At worst, it indicates wide spread fraud in the foreclosure process.  Regardless, it appears such practices are rampant in the industry.  All the attention could be good news for homeowners in the Northern San Joaquin Valley, however, which has been ground zero for the foreclosure crisis after the housing bubble burst.

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