Should A Struggling Homeowner Hire An Attorney?
There is wisdom in a multitude of counselors. Dealing with your mortgage(s) should not be done alone as it is an extremely complicated process which naturally causes high stress and will most likely produce unwise decisions. I always recommend finding HUD approved counselors to help you based on your specific situation but whether it is a Foreclosure, Loan modification, Short sale, or filing for Bankruptcy, consulting with an attorney is just as important to safeguard your future. Key point: Find the right attorney to counsel you.
How would an attorney help me?
In America, it is wise to have an attorney on hand. We deal with legal matters more often than we realize even for the little things including overcharges for repairs, speeding tickets, returning defective products, and so on. An attorney will be in your best financial interest if you know when and how to utilize their services.
What about the more serious situations such as dealing with mortgages and deficiencies? Whether you are letting go of your property via foreclosure, deed-in-lieu of foreclosure, a short sale or pursuing a refinance/loan modification, sale/leaseback, or filing for chapter 7 or 13 bankruptcy, any decisions without an attorney can be a detriment to you and your family.
An attorney will be able to guide you to the right decision for your home and whatever route you take, their counsel will be a safeguard for your path. Some examples of the need for an attorney are:
*All laws vary from state to state.
- Foreclosure – Knowing your state foreclosure laws/processes and your rights as a homeowner is very important. Even if you live in an anti-deficiency state and your home is foreclosed on, having a subordinate lienholder will put you at risk of a deficiency judgment. You also need to know exactly what the tax and credit implications are after a foreclosure.
- Short Sale – In a real estate transaction, there are a number of documents you must review and sign. In short sales, you must be very careful in reviewing all the documents especially when you are dealing with the deficiency agreement on the approval letter. If your lender requests you sign a promissory note when closing the sale, you must understand the terms of agreement.
- Bankruptcy – Many homeowner’s have false notions on what all a BK can do for them. In a chapter 7 bankruptcy, you liquidate your non-exempt assets and can discharge unsecured debts. However, this does not eliminate liens as it does not discharge secured debts. Your lender is a secured creditor meaning the debt owed to them is secured by the lien on your property.
If you have some income, you may file for a chapter 13 BK where you keep assets but rather than discharging your debts (some are dischargeable i.e. fraud judgments), you reorganize them to pay off overtime (3-5 yrs.) according to a repayment plan set by the court. You must still make payments to your lender according to the repayment plan. If you miss any payments under your plan, your case will be dismissed by the court
Be sure you know exactly what pursuing a Bankruptcy entails and if you even qualify. Your attorney will be able to explain that to you and help you determine whether BK would be in your best interest based on your situation.
- Loan Modifications – Although I do not endorse pursuing a loan modification yourself, your attorney can give you consultation through the process and go through the documents with you.It is a no brainer, if you are in pre-foreclosure status, find yourself an attorney.
Hope this helps