Things to Know if the Pandemic Has You Considering Bankruptcy

The COVID-19 pandemic has hit Floridians and people throughout the country in extremely difficult ways. In April, just a few weeks after shelter-in-place orders were issued in nearly every state, 22 million people filed unemployment claims. With the virus still circulating in communities, and businesses slowly reopening or still closed, it is expected that many more Americans will start filing bankruptcy claims. If you have lost your job or experienced other financial difficulties during this unprecedented time and are considering filing for bankruptcy, below are some things you need to know first.

Know Your Options

When debt is spiraling out of control, many people think they do not have any options but to continue to ignore phone calls from debt collectors. Truthfully, though, you have three options: You can either continue to make your minimum payments, negotiate a settlement with the debt collectors, or file for bankruptcy. In most circumstances, it is not logical to file for bankruptcy without first exploring your other options.

It is possible in many instances to get back on your feet without filing for bankruptcy, and banks and loan servicers are often willing to work with you, particularly during this difficult time. Although bankruptcy can provide immense financial relief, it should only be used as a last resort.

Call Lenders Before Filing

During this time of the pandemic, many regulators, lawmakers, and financial institutions have rolled out multiple assistance programs that you may be able to take advantage of while you still can. Some of the biggest lenders have created hardship programs that allow you to defer certain payments, including student loan debt, credit card debt, and car loans. If you have fallen into financial hardship due to the pandemic, call your lender and ask about any assistance programs they may offer. Make sure you do so before you start to incur late fees, as those will cost you more in the end and the lender may even be more willing to work with you.

Understand the Other Actions to Take

Financial hardship programs will only be in effect for so long before the lender expects you to start paying your bills on time once again. Additionally, certain lenders may also expect you to make all of your missed payments at the same time. If you still feel that you cannot meet your financial obligations, it is time to take some additional steps.

If your mortgage is underwater, meaning the total on the home loan exceeds the amount of the home’s value, ask your lender if you are eligible for a loan modification. A loan modification will change the terms of your mortgage, including possibly the principal amount you owe. If the lender approves your request, your monthly payments will be reduced to an amount that is easier for you to pay. Although you can ask your lender for a loan modification on your own, it is always best to work with an attorney who can negotiate on your behalf and prepare the necessary paperwork.

If it is credit card debt you are suffering from, you can also ask the lender to negotiate either a debt management plan or settlement. This step will likely require working with a non-profit debt counselor that can consolidate the debt into one monthly payment that you will pay off over the course over a number of years. Also, credit card companies will often agree to a settlement. A settlement will only work if you can make a lump sum payment that repays a portion of your debt and after the payment is made, the debt is considered repaid.

Know What to Expect If You File for Bankruptcy

The two most common types of bankruptcy filed are Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, you will have to sell at least a portion of your assets, including a second property or vehicle you may own, stocks and bonds, or collectibles. The proceeds from the sale of the assets will be put towards your debt. Once the bankruptcy is approved, your outstanding debts are typically wiped clean. The entire process from beginning to end will typically take approximately three to five months. If you cannot pay back all, or at least a significant portion of your debt, Chapter 7 is likely the best option for you.

Chapter 13 bankruptcies, on the other hand, are also known as reorganizational bankruptcies because they do just that. In a Chapter 13 bankruptcy, a repayment plan is created that will allow you to pay off all of your debt, or a significant portion of it, usually within three to five years. People that are behind on their mortgage payments and are in fear of foreclosure often find that filing Chapter 13 bankruptcy is a good option because they will not lose their home in the process. Like your other property, you can typically keep all of your assets in a Chapter 13 bankruptcy, but you are expected to pay off the debt.

With both Chapter 7 and Chapter 13 bankruptcies, you must appear in court so a judge can approve the different aspects of your case. Although most federal courts shuttered during the early days of the pandemic, many are now open. Still, most court hearings are being held virtually, with the courthouses being closed to the public. Your case may be postponed, or it may be heard remotely over a platform, such as Zoom.

A Florida Bankruptcy Lawyer can Help with Your Case

The pandemic has hit Floridians extremely hard, and many are now considering filing for bankruptcy. If you are consumed by debt and think bankruptcy may be your only option, call our Fort Lauderdale bankruptcy attorneys at Loan Lawyers. We will guide you through the process, tell you what to expect, and make sure you are prepared so you have the best chance of success with your case. Call us today at (954) 807-1361 or contact us online to schedule a free consultation so we can discuss your legal options.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.

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How Many Times Can You Apply for a Loan Modification?

If you are struggling financially and are facing foreclosure or bankruptcy, meeting with a loan modification lawyer is one potential tool that could help your situation. But can you apply for a loan modification more than once?

Basics of Loan Modifications and Requests

There is no legal limit on how many modification requests you can make to your lender. The rules will vary from lender to lender and on a case-by-case basis. That said, lenders are generally more willing to grant a modification if it’s the first time you’re asking for one.

While most lenders understand how life events can disrupt someone’s financial situation — for example, losing a job or the death of a family member — a second modification request may make it appear as if you are incapable of maintaining your finances.

There are guidelines on the number of potential modification requests you can expect to be granted by certain lenders. People with loans backed by the Federal Housing Association (FHA) can generally expect to receive two to three loan modifications, although the FHA will only modify a loan once every two years.

Homeowners with loans backed by Fannie Mae or Freddie Mac can usually get three to five modifications, but requests will get increasingly difficult to fill because these organizations are required to lower your mortgage payment by 10 percent if you receive two or more modifications. With private lenders, you might not be able to receive a modification at all because there’s no public requirement for them to consider any modification requests.

Will a New Loan Modification Improve My Situation?

Whether a new loan modification will help your situation depends on the existing terms of your loan and the terms granted by your modification. In general, getting your interest rate lowered or your principle reduced will help. However, simply having payments deferred might not help in the long-term because of the additional interest that you’ll accrue.

That’s why it’s important to hire a foreclosure and debt defense lawyer to help you negotiate the best possible terms for your modified loan. Additional loan modifications might also impact your credit score, which could have financial repercussions later on.

Is the Approval Process Different the Second Time Around?

If you’re going back to the lender for an additional loan modification, you should expect a more thorough and intense approval process. The lender might ask for additional documentation about what caused you to fall behind on your payments, as well as proof that you’ll be able to make future payments.

A lawyer trained to handle loan modification proceedings can help you collect the documents needed and build a compelling case to persuade a bank or other lender to grant you the loan modification that you need.

Contact a Florida Loan Modification Lawyer

The prospect of having your home foreclosed on is a terrifying notion, to say nothing of what can happen if the bank actually repossesses your house. To prevent this catastrophe from happening to you, turn to the experienced foreclosure defense attorneys at Loan Lawyers. At Loan Lawyers, our team takes a comprehensive approach to foreclosure and debt defense cases. We’re ready to negotiate aggressively to seek the relief you need. Get in touch today by calling us or visiting our contact page.

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Debt: The Good, the Bad, and the Ugly

You may have heard that there is good debt and bad debt. Good debt is typically considered debt that will work for you at some point in the future, such as a mortgage or a student loan. Bad debt, on the other hand, usually consists of consumer debt that will not do anything for you, such as credit card debt. While these are very simplistic definitions of good debt and bad, the definitions of good debt and bad debt are much more nuanced. No one should take on debt just because they think it is ‘good’ and without realizing all the ramifications it may bring.

Student Loan Debt

Tuition in America is extremely expensive and most people cannot afford to obtain a post-secondary education without going into at least some debt. However, not all college and university programs are created equal, and it is critical that you understand how much student loan debt is good, and when it starts to move into the bad category.

According to the Charles and Helen Schwab Foundation, you should not take out a student loan that is more than what you expect to earn in the first year. For example, if you want to work in education, you may consider going to school to obtain a master’s degree in education. Perform some research to determine how much you expect to make in your first year. If that amount is $65,000, you should not borrow more than $65,000. That total includes the student loan debt you will need for your total education, not each year.

This logic works because it is presumed that the longer you work in your chosen field, the higher your salary will climb. As such, you should be able to repay the debt and the accumulated interest within the typical 10 years you will have to repay it.

However, if the economy is on a downturn, or the job market is unstable, you may want to take on less debt than what you expect to make in your first year. Otherwise, your student loan debt could quickly be categorized as bad debt. If you are already enrolled in school when the economy takes a hit or there is a sudden lack of jobs in your field, consider taking on less debt in future years.

Your Mortgage

Historically speaking, mortgages have been considered one of the best types of good debt a person could incur because every time you make a monthly payment, you are building equity in your home. Still, there is perhaps no one in the country that knows more than Floridians that mortgages are not always a guarantee that everything will work out. Foreclosures can happen. Home prices do not always increase the way they are expected to, and if you borrow more than you can afford, or do not fully understand the terms of your mortgage, owning a home may actually hurt you more than it helps.

This was never more evident than during the subprime mortgage crisis in 2008. At that time, home prices plunged while adjustable-rate mortgages (ARM) were adjusted upward and many homeowners lost their home to foreclosure. Still, home loans are considered as one of the safest investments you could make today, but you must understand how much you should borrow, and the market conditions at the time you purchase the property.

The general rule of thumb is that your monthly mortgage payment should not exceed more than 28 percent of your gross monthly income. Remember as well that the recommended percentage includes not only the principal and interest on the loan, but also private mortgage insurance, property taxes, and other expenses that are included within the monthly payment.

In addition to following the percentage rule, you should also take many other factors into consideration when applying for a mortgage. To determine the monthly mortgage amount you can afford, consider the size of your family, as well as the possibility of future layoffs or any other event that may affect your ability to pay your mortgage on time every month.

Distinguishing Good Debt from Bad Debt

Although certain types of debt, such as home loans, are considered good debt and other types, such as consumer debt, are considered bad, clearly, it is not always that simple. When determining if debt is good or bad for your personal situation, you must ask yourself whether the debt will give more than what you put in.

It is a question that seems rather simple, but you really have to give the answer a lot of thought. Consider factors such as not only the principal amount, but also the interest that debt will accrue, and other ways you could use that money. When you start to look at debt this way, it is true that even a credit card could be considered good debt, as long as it will work for you in the end.

When Debt Becomes Ugly

It is clear that even when you incur purportedly ‘good’ debt, it can quickly become a bad situation. In the best of cases when this happens, people may experience financial hardship for a brief period of time before quickly getting back on track. Unfortunately, this often does not happen. When that is the case, the debt may turn from bad to ugly.

The worst type of debt, ugly debt, is that which causes a debt collector or creditor to take legal action against you. After you have not paid your debt for a while, a debt collector may file a lawsuit against you, which could result in wage garnishment or other consequences that could place you in even greater financial hardship.

Suffering from the Wrong Type of Debt? Call Our Florida Debt Defense Lawyers

Categorizing all of one type of debt as good or bad is one reason why debt soon becomes unmanageable for some and it turns into ugly debt. If you are suffering from debt and a debt collector or creditor has taken legal action against you, our Fort Lauderdale debt defense lawyers are here to help. At Loan Lawyers, we know how to defend against debt lawsuits so you do not fall further into financial hardship. For the best chance of success with your case, call us today at (954) 807-1361 or contact us online to schedule a free consultation.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.

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Commercial Cash Management Loans

Commercial cash management loans are loans that generally have extremely onerous terms for the commercial borrower.  Often even if you make the payments on these loans, you can find a commercial loan in default.  For example, if your cash flow is not compliant with the terms of the mortgage, the loan servicer can transfer your loan to special servicing.  They can usually also place the loan in special servicing if the rented space falls below a specified percentage of rentable space.  For example, if occupancy falls below 80% (or some other number specified in the mortgage), they can declare a default.  Either of these examples may be enough to put the loan into cash management status and incur special servicing fees.  Again, this can occur if you never missed a payment, and certainly can occur if you have missed a payment.

Special servicing fees can run thousands of dollars per month and completely bury your property.  Often, the investors in these loans employ a “loan to own” strategy.   They bury the property in special servicing fees and default interest, even if you never missed a payment. Once they have buried the property with ridiculous, but often legal, fees and charges, they eat up all of your equity making the property have no net value.  They then try to foreclose causing the commercial property owner to incur tens of thousands in legal fees while also running up a massive bill on their side.  Then they try to convince you to deed the property to them or they proceed to foreclosure and buy the property at auction.

If you find yourself in default or in foreclosure in a commercial cash management loan, do not roll over and do not allow the loan servicer to take advantage of you.  There may be a real defense that you can assert to turn the tables on the loan predator, I mean loan servicer.  You cannot just turn to any law firm though.  You need an aggressive law firm that specializes in defending foreclosures and has experience in defending cash management loan foreclosures.

One of the defenses that you may be able to assert is the negotiability of the promissory note.  These commercial cash management mortgages are extremely complex legal instruments that often span dozens, if not hundreds, of total pages.  A promissory note that is a simple promise to pay a fixed sum of money is a negotiable instrument in Florida.  This means that the loan can be sole multiple times and any company that is in possession of the note indorsed in blank may enforce the note.  Often, these commercial cash management loan foreclosures have promissory notes that are indorsed in blank.  However, cash management loans are anything but simple promises to pay.  They contain provisions as I have eluded to above, like occupancy and cash flow requirements that can trigger a default.   This may make the loan a non-negotiable instrument.  If that is all the loan servicer has to prove it has the right to enforce the note, they may have a real problem on their hands and you may have a real defendable case.

Negotiability is only one of the myriad of issues that may be raised in defense of a cash management mortgage loan.  It is certainly not advisable to roll over and give up nor is it advisable to use a lawyer who is not well versed in these types of mortgages.  Finding a lawyer who understands these loans and has experience in defending defaults and foreclosures relating to these loans may make the difference between saving your commercial property and losing it entirely.

Further, these loans often have personal guarantees that could leave the guarantors liable for hundreds of thousands of dollars, or even millions of dollars, of liability.   These mortgages are terrible and are generally full of terms that only benefits the lender and their successors.  There is too much at stake to leave the defense of these defaults and foreclosures to amateurs.  Call loan Lawyers today for your free consultation to discuss your commercial cash management mortgage loan and let’s see how we may be able to help you.

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Are There Benefits to Letting the Bank Foreclose?

As Floridians continue to feel the fallout of the ongoing pandemic, Governor Ron DeSantis has been asked by two advocacy groups to extend the moratorium currently on mortgages in the state. In late September, the Florida Housing Justice Alliance, along with Connected in Crisis, collectively wrote to the governor asking him for an extension on the moratorium, as well as a freeze on utility shutoffs. Currently, both of these pandemic relief solutions are set to expire on October 1, 2020.

The governor has not yet responded to the request that would bring relief to millions of homeowners in Florida. For those that are facing foreclosure, and do not think there is any chance of keeping their home, it is easy to focus on the negative aspects of the process. As difficult as it is to think though, there are some benefits to simply letting the bank foreclose.

When to Walk Away From a Forclosure

Before getting into the benefits of letting the bank foreclose, it is important to know when it might be the best option. A number of defenses to foreclosure are available in many cases; you really need to weigh your options and determine if the risks outweigh the rewards.

When a home is underwater, it may be a good idea to simply walk away and let the bank foreclose. An underwater home refers to when the mortgage loan is for more than what the home is worth. During the housing crisis of 2008 and 2009, this happened all around Florida and throughout the rest of the country. Borrowers were underwater on their mortgage and even though they could pay their home loan, they simply decided not to.

It is generally not recommended that homeowners walk away from their property simply because their mortgage is underwater. When borrowers are able to repay the loan, doing so will cause much less harm to their credit report than a foreclosure.

If you are eligible for a short sale or a deed-in-lieu of foreclosure, these are also better options than simply walking away and letting your lender foreclose. You will still unfortunately lose your home with either of these options, but you will also feel fewer negative impacts once the process is over.

Benefits of Letting the Bank Foreclose

If you are behind on your mortgage payments, or the lender has already started the foreclosure process, you are likely thinking the worst has happened. Although the thought of foreclosure is a nightmare for any homeowner, there are some benefits that you may not expect.

Once the lender has started the foreclosure process, you may be able to save more money. Many people stop paying their mortgage payments once the lender starts the foreclosure process and instead, they set that money aside so they can save for an apartment or other housing accommodation.

If you do qualify for a short sale or a deed-in-lieu of foreclosure, your attorney can include a clause within the agreement that the lender is prohibited from seeking a deficiency judgment. If successful, this means that the lender cannot pursue the remaining amount on the mortgage. In the event that you do not qualify for a short sale or deed-in-lieu, it may not be wise to stop paying your mortgage. In these instances, you will not draft an agreement with the lender and so, they may still be able to pursue a deficiency judgment, meaning you will still owe the outstanding balance.

When facing foreclosure, it is easy to think that you are out of options. Fortunately, you may find that the process actually gives you more options than you would have first thought. Lenders are very willing to work with borrowers early in the foreclosure process. They don’t really want the burden of taking your home and reselling it, because that takes time and money. As such, you may find that your lender is more willing to negotiate with you. You may be able to negotiate the interest rate, the term of the home loan, and perhaps even the principal left on the mortgage. These are options you may not have available until foreclosure becomes a reality.

Even with how hard the foreclosure process is, once it is over you will have a fresh start. You will no longer have the immense burden of a mortgage you cannot pay, or of trying to find a buyer for a home you do not think you can sell. Although you will be unable to buy a home for some time, once the foreclosure process is over, you can find a new home you can actually afford, and enjoy living in it, too. With the heavy burden gone, you may find you enjoy your new home even more.

Lastly, you will learn many valuable lessons throughout the foreclosure process, and likely even beforehand. While it is a difficult process to go through to learn those lessons, they will be invaluable to you as you move forward in your new life.

For example, if you had to foreclose on your home because you lost your job and could not pay the mortgage, you can start to create a contingency plan in the event that it occurs again. You may start that emergency fund you have been putting off, so that you are prepared for any future financial challenges.

Want to Keep Your Home? Our Florida Foreclosure Defense Attorneys Can Help

Although you may reap some benefits when simply letting the bank foreclose, you may still have options that will allow you to stay in your home. At Loan Lawyers, our Fort Lauderdale foreclosure defense attorneys know the defense strategies available to homeowners. After reviewing your case, we will advise on the defenses available to you, effectively negotiate with the lender on your behalf when possible, and give you the best chance of keeping your home.

Call us today at (954) 807-1361 or contact us online to schedule a free consultation with one of our skilled attorneys.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.

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Common Mistakes Made After Becoming Debt-Free

It seems as though the year 2020 has not brought a lot of good for the people in Florida, or anywhere else in the country. However, a new study has shown that there is some positive news. According to WalletHub.com, American consumers paid off $118 billion in credit card debt during the first half of the year. That may seem impossible during the COVID-19 crisis, or at any other time period in history. In fact, this figure is a record that has never been set before in the nation. The increase is being attributed to a reduction in credit card debt, more austerity being practiced in households, and the stimulus checks issued by the government in the early days of the pandemic.

Again, the news is good for borrowers who have had trouble finding anything good to come out of the pandemic. At this time, it is important to be able to continue focusing on the positive and to avoid the most common mistakes people make after becoming debt-free.

Getting Back Into Debt

People fall back into debt after finally getting rid of it for a number of reasons. One is that they still have too many expenses and their income does not fully cover it, so they have to rely on their credit cards. Others have simply felt deprived of buying the things they love, so they go on a spending spree with little regard to how much they are spending and how much they will have to pay back.

It is essential that you cut back on spending and that you absolutely do not buy things you cannot afford. If you have to buy something using a credit card, make sure you can pay off the balance in full when the bill comes at the end of the month. Any time you are tempted to make a purchase, do not only ask yourself if you can afford it, but also remind yourself of the past few months or even years. Getting out of debt is very challenging and few people want to do it more than once. Remember the challenging times, and you will likely be less tempted to get back into that situation again.

Closing Your Credit Card Accounts

The idea that closing your credit card accounts will help you avoid falling back into debt is one that is filled with good intentions. Unfortunately, it is a move that could hurt you more than keeping them open.

Even if you are not thinking about it right now, there is a chance that at some point, you may want to buy a home, take out a car loan, or apply for another type of loan. To do this, you will need a good credit history, as it is one of the determining factors in whether or not a lender will give you a loan. Closing your credit card accounts will only hurt your credit score.

Lenders prefer to give loans to people who have a long borrowing history. If you close the account, it will fall off of your credit report and lenders will be unable to see it and it will not count towards your borrowing history. When you really do not want to use the card, but you also know it is usually not worthwhile to close the account, shred the cards instead with a pair of scissors but keep the account open. This will prevent you from leaning on the card too much, but will also keep the account, and its good standing, on your credit card.

Still, often it is a better idea to move away from the idea of not using cards at all and instead move towards the idea of using the card more wisely. Many credit cards have an annual fee attached to them and if you cut up the card and cannot use it, you are still responsible for paying the annual fee. Also, if your card goes unused for too long, there is a good possibility that the creditor will close the account.

If you have confidence in your new spending habits, keep the card and use it for small purchases, such as groceries or one tank of gas, and pay off the balance every month. This will show future lenders that you are not a borrowing risk, and that you will likely pay off any debt you take on with them.

Failing to Establish New Financial Goals

Many people work so long to get out of debt that they start to think that is the only financial goal a person could have. Truthfully though, one of the reasons you went into debt is likely because you did not have financial goals. If you do not make any new ones after you get out of debt, you may find yourself in that position again. Now is the time to start investing in retirement savings, creating an emergency fund, and start putting money away for your child’s tuition or any other large financial goals you have been dreaming of while paying off your debt.

Failing to Check Your Credit Report

If you did not check your credit report with one of the major bureaus while you were paying off your debt, it is critical that you do it now. Obtain a free credit report from TransUnion, Experian, and Equifax every year and carefully review it. This is the only way to know if old debts are still showing up, if the report contains debt that is not yours, or if it contains any other errors. These mistakes will not only lower your overall credit score, but they can also indicate that something more serious has occurred, such as identity theft.

Our Florida Debt Defense Attorneys can Help with Legal Actions

Getting out of debt is a great feeling but unfortunately, it is one that many still have not yet experienced. If you are suffering from debt and a collector has taken legal action against you, our Fort Lauderdale debt defense attorneys can help. At Loan Lawyers, we know the many defenses available in these lawsuits and will use them to give you the best chance of success.

Call us today at (954) 807-1361 or contact us online to schedule a free consultation and get the sound legal advice you need.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations.

Contact the debt defense team at Loan Lawyers for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.

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Common Myths About Underwater Homes

Sometimes, it seems as though homeowners in Florida cannot catch a break. Just as the state was beginning to recover from the recession in 2008, the pandemic hit. Homeowners did not know how they were going to pay their mortgages and suddenly faced the possibility that they may lose their homes. Now, foreclosures are once again soaring in Florida, and that wave has also caused many home prices in Orlando to plunge. Sadly, many homes are now underwater, meaning the amount on their home loan is more than the home is worth. Many underwater homes do eventually end up in foreclosure, so it is important to understand some of the most common myths associated with them, which are found below.

The Lender Cannot Foreclose While I Am Negotiating With Them

This myth probably came about because some government and government-backed loans stipulate that the bank must stop any foreclosure action after a short sale, or loan modification. However, these procedures must already be filed in order for that law to come into effect. That means that the short sale must have already closed, or a loan modification must have been signed in order for it to be unlawful for the lender to proceed with a foreclosure lawsuit. Too many homeowners have lost their homes thinking that the lender could not proceed when in fact, they could.

I Do Not Have to Negotiate a Short Sale or Loan Modification Until the Foreclosure Sale Starts

One of the biggest mistakes homeowners make when they are facing foreclosure is that they simply wait too long before they start working with their lender. The truth is that once a foreclosure sale has started, there is typically little a borrower can do to stop it, and it is too late to start negotiations with the lender at that time. The best thing to do is to contact your lender as soon as you fear foreclosure, as you will have the most time possible at that point to work with them.

A Deed-in-Lieu of Foreclosure Is Better than a Short Sale

It is true that short sales have some consequences. For example, the lender may pursue a judgment against the borrower for the amount remaining on the mortgage. Or, the lender may make a request for an unsecured promissory note to be repaid to them. These are just two of the possible consequences of a foreclosure, but threatening the lender with a deed-in-lieu of foreclosure is no better than a short sale. Firstly, the lender must agree to both a short sale and a deed-in-lieu of foreclosure. More importantly, a deed-in-lieu of foreclosure carries all the same consequences as a short sale, so you will not be avoiding anything by going that route.

Even worse, some people think simply allowing the lender to foreclose is better than a short sale or a deed-in-lieu of foreclosure, which it is not. Foreclosures have a much more negative impact on a credit report than either alternative to foreclosure, so it is best to always try to negotiate with the lender and try to come up with an alternative solution.

I Have Filed for Bankruptcy, so the House is No Longer Mine

It is true that when a bankruptcy case is filed, there is a chance of losing the home. However, all debts, including your home loan, are yours until the bankruptcy is finalized. Due to the fact that Florida is a “lien theory” state, you own the home until you voluntarily sell it, or until the trustee or lender takes the home. If they fail to take these actions, the home is still considered your property.

Additionally, when you file Chapter 7 or Chapter 13 bankruptcy, you will fill out a Statement of Intentions. This statement is intended just as it sounds. It is your intention of what you are going to do with the home. Filling out this statement does not mean that the house is no longer yours.

Threatening Bankruptcy Will Force the Lender to Work with Me

First, it is never a good idea to threaten your lender when facing foreclosure. Lenders and their attorneys understand the laws of bankruptcy very well. Just as threatening to allow the lender to foreclose, threatening that you will file bankruptcy will not give you any leverage against the lender.

The Bank Cannot Foreclose if They Do Not have the Original Note

This myth is somewhat rooted in the truth. It is true that lenders must prove they own the original loan, which they can do with the original note. If they cannot produce this, there is a chance it could serve as a defense to foreclosure. However, even when the lender has lost the original note, there are some exceptions to the rule. A lender can still foreclose without the original note if:

• They present evidence showing they owned the loan at the time the note was lost;
• The note stipulates that the bank is entitled to start a foreclosure lawsuit; and
• The loss of the note was not due to the transfer of the owner.

Still, even with these exceptions, lenders will generally find the original promissory note and file it with the court when pursuing a foreclosure lawsuit. As such, it is generally not in your best interest to assume that because the lender lost the original note, they cannot foreclose on your home.

Our Florida Foreclosure Defense Lawyers Can Help with Your Case

There are many myths surrounding underwater homes and foreclosures. If your home is underwater and you are in fear of losing your home, our Fort Lauderdale foreclosure defense attorneys can help. At Loan Lawyers, we have helped thousands of homeowners keep their homes, and we know the defenses available that may help you keep yours, too. Call us today at (954) 807-1361 or contact us online to schedule a free consultation with one of our knowledgeable attorneys and to learn more about how we can help.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.

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