Can bankruptcy help me keep my house?

The Washington Post recently reported that the Obama administration is not planning a large federally funded program for relieving the troubled housing market. This news comes despite the President's acknowledgement that the billions of dollars already spent to bolster the weak housing market have not solved the problem.

The Post reports that the housing market is suffering from a glut of inventory. The article cites David Stevens, head of the Mortgage Bankers Association, who says that it would take more than nine months to sell all of the homes on the market at the current sales rate. To add to this grim news, industry statistics suggest that more than four million homeowners are having trouble paying their mortgages.

In direct opposition to promises made to the federal government, many banks have been reluctant to write down the balances of underwater mortgages. In some cases, banks have misled homeowners into spending their savings with false promises of modifying their mortgages. So what can a homeowner do to take control?

My office has been at the forefront of utilizing both Chapter 7 and Chapter 13 bankruptcy law to help Chula Vista and San Diego residents restore the balance between the struggling homeowners and the bank. Filing a bankruptcy will immediately stop the foreclosure process, and provides time to consider available repayment options. A Chapter 13 bankruptcy case can force a creditor to accept monthly payments for mortgage arrears (past due mortgage payments) over a three to five year period. Additionally, an entirely unsecured junior mortgage can be stripped away and included in a discharge as an unsecured debt. To date my office has helped hundreds of homeowners to completely eliminate their second mortgage.

For California debtors with underwater mortgages, the bankruptcy discharge acts as a hammer during the negotiation process. If the lender refuses to negotiate, the homeowner can walk away through a Chapter 7 or 13 bankruptcy discharge with a fresh financial start. Bankruptcy debtors are also eligible to participate in loan modification programs. Finally, a Chapter 7 case provides an opportunity to negotiate a new contract between the lender and borrower in the form of a reaffirmation agreement.

If you are experiencing trouble with your home mortgage, call the Denton Law Group at (619) 458-3739 and review your options. The federal bankruptcy law provides California homeowners with options to cure serious financial problems.

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