How Long Can I Stay In My Home After I Stop Paying The Mortgage

494 days.

That’s according to an article in the Chicago Tribune, May 22, 2011.  This figure was pulled from RealtyTrac, who tracks foreclosures from the filing to the sheriff’s sale.  Bottom line: you can stay in your house at least a year.

The problem:  What if a deficiency judgment is entered against you?  Then you’ve gotten rid of your house, but still need a bankruptcy to get rid of the deficiency judgment.

Falling home prices have caused many people to choose to default on their home. It is good idea to see a qualified bankruptcy attorney to see if you are “judgment proof” or will the target of a deficiency judgment.

illinois hardest hit program

illinois hardest hit program

Illinois Hardest Hit Program – Save Your Home – $25K Grant to Pay Mortgage Arrears

For anyone who hasn’t heard, here’s the news…there’s a new program on the block for saving your home.  And for some people, it’s a hit.

Looking for unbiased help in figuring out how to save your home?  Check out the following housing organizations. Click on the Link.  I have worked with all of them for years and know of their honesty and fair dealing:

The Illinois Hardest Hit Program essentially gets your home out of foreclosure.  Pays all the arrears, court costs, etc. to reinstate your loan fully and then provides up to 18 months of payment assistance.  The cap on the assistance is $25,000.

To apply for this program, please go to (click link):  Illinois Hardest Hit Program


  • No Fees
  • Completely Reinstates Your Mortgage
  • Up to 18 months assistance


  • Increases the mortgage balance on your home by up to $25,000
  • Does not reduce the total amount owed on your home
  • Does not provide assistance after 18 months which is a problem if a person has not secured employment or their family is only partially employed

Who are the best candidates for this program:

  • Homeowners who are only temporarily out of work and can easily return to work in a stable job within 18 month of starting the program
  • Homeowners whose mortgage has less than $15,000 in arrears or is about 6 months or less behind
  • Homeowner who want to stay in their house for 10 years or more and does not care about having the flexibilty to move….for say a new job, changed family circumstances (divorce) or any other matter

Who are the worst candidates for this program:

  • Homeowners who haven’t made a mortgage payment for over one year
  • Homeowners who are in a profession that has been affected by the severe economic downturn such as construction or union jobs and are unlikely to have stable employment for the next five years
  • Homeowners who want the ability to be flexible in selling their home in the next 10 years

Who should consider a short sale of their home instead of this program:

  • Homeowners who cannot afford their home even when they are fully employed
  • Homeowners who are in an employment industry that will not recover soon and may need to relocate for employment
  • Homeowners who have so much debt on their home that they will not have equity for ten years or more (typically someone with two or more mortgages including a home equity line of credit)

Who should consider a Chapter 7 Bankruptcy instead of all of these options?

  • Homeowners who have unsecured debt (credit card style debt) that exceeds more than 1/3 of their annual take home pay
  • Homeowners who have not made a mortgage payment in over one year
  • Homeowners who have not been able to get a short sale approved by their lender
  • Homeowners who want to easily walk away from a home to simply move-on or need to relocate for employment
  • Homeowners who are insolvent – that is – no real assets outside of retirement accounts

When is a Chapter 13 Bankruptcy Reorganization a  better than the Illinois Hardest Hit Program?

  • When a mortgage debt is more than 6 months in arrears (no payment for at least 6 months or longer
  • When the homeowners property has more than one mortgage such as a second mortgage or home equity line of credit
  • When the homeowner has equity or something valuable to save in the property but also has a large amount of unsecured debt (credit card style)
  • When the total home mortgage debt can be reduced through “stripping off the second and junior mortgages/liens”

loan modification not permanent

Mrs. Free's Studios Davenport, Iowa

Mrs. Free’s Studios Davenport Iowa

loan modification not permanent

Why Hasn’t My Loan Modification Become Permanent – I’ve made the trial modification payments and now I haven’t heard anything from the bank?

Homeowner is a woman whose house is worth approximately $100,000. She has a mortgage loan of approximately $180,000 and a new trial modification payment of $1000 per month. She has made all three trial modification payments of $1000 each on time and in compliance with the lender’s demands. At this time, she has now made a total of 6 payments and the lender has still not offered a permanent loan modification. After the third payment was made, the lender “asked for more information.” She has not been able to get any more updates from the lender.

What should she do?

If she wants to stay in the house for over the next five years regardless of whether the loan modification is made permanent, keep making the trial modification payments until the lender says otherwise.

If she does not want to keep the house unless she get the permanent loan modification, I would recommend walking away from the home. The homeowner should try a short sale, deed in lieu of foreclosure and ultimately bankruptcy to eliminate this debt.


Most residential primary household loan modification are done under the guidelines of the HAMP (Home Affordable Modification Program). This “program” is not a law and is not something that a homeowner can enforce against a lender. Instead, it is a law that provided “incentives” of up to $1000 to a mortgage servicer to keep a borrower from defaulting on their mortgage. The incentives HAVE EXPIRED. Lenders are simply offering modifications under these guidelines to improve their profitability by keeping more borrowers from defaulting. However, where a borrower really can’t afford the home long term, it can be surmised that lenders are simply “stringing along” borrowers for several months…without end at trial loan modification payments amounts to get them to pay more towards the lender until they ultimately give up, default, or go back to making their regular mortgage payments.

Therefore, in this case if the borrower simply stopped paying after 6 months of trial modifications, she would be:
1. In Default
2. Not have a modified mortgage
3. Be in arrears immediately because she had been making a lower payment than what was required by the lender
So why can a lender get away with this?
1. Lenders DO NOT have to give modifications after the trial period is completed
2. Lenders DO NOT have to give modifications even if underwriting says they qualify
3. Lenders CAN tell borrowers that they will accept lower payments and accept them and Still then declare a default at anytime and foreclosure AT THEIR LEISURE AND WILL
4. Borrower CAN BE SCREWED OVER at anytime in these modifications
5. Lenders CAN CHERRY PICK only the best borrowers and use modification processes to hurt borrowers and get the most amount of money from them
So is there any justice?

YES – in foreclosure, if the borrow hires good legal counsel for usually more than $2500 in legal fees, fraud can be alleged and judicial action can be taken against the lenders including rescinding the loan.

Why don’t we hear more about loans being rescinded?

Usually borrowers are completely out of money and the will to fight any longer by the time the foreclosure begins and simply walk away. Lenders know this and build their business models to exploit this.

Bottom line – BE AN ACTIVIST! If you don’t get your permanent modification in three months as promised, don’t wait – take action. Call any attorney immediately to figure out your options:
1. Foreclosure Defense
2. Bankruptcy
3. Non-Bankruptcy Surrender Options
For more assistance and to schedule a free consultation, email the NLO Nelson Law Office today at or by calling us at 877-464-6656.

How to Compute Real Estate Tax Proration Illinois & Tax Credits in Cook County Illinois

John Deere Planetarium Augustana College Rock Island Illinois

John Deere Planetarium Augustana College Rock Island Illinois

How to Compute Real Estate Tax Proration Illinois & Tax Credits in Cook County Illinois

  • Do you need an attorney for your real estate closing? Selling your house? Please contact NLO today

If you are a young attorney just starting out or just someone interested in the obscure world of tax prorations, this article is for you.  Tax Prorations are essentially receiving credit for unpaid property taxes either now or later after tax bills come out.

History:  In the Great Depression of the 1930’s; the State of Illinois granted a one year property tax holiday.  This set all tax collections back one year.

Example:  Your Tax Bill for the First Half of 2010 (January 1, 2010 to June 30, 2010)  is $2000.  The tax bill is dated March 15, 2011 and due by June 30, 2011.    Since the bill is provided nearly a year after when the tax was incurred, the taxpayer has no idea what his tax bill will be when the tax is actually being incurred….He can only estimate based upon his prior tax bills.

Application:  When you purchase a piece of residential real estate in Cook County, clear title is provided and all of the taxes that can be paid are paid up on the day of closing.  However, because tax bills come out one year after they are due, there is often an entire year of property tax liability that is unpaid and the actual bill is unknown..

Example:  Buyer of Real Estate makes offer to purchase a home in Chicago.  The offer is accepted June 1, 2011.  The closing is to be September 30, 2011.  Full Year Tax Bill for 2009 is $4000.

First:  Calculate the estimated tax liability  up to the date of closing:

First Half of 2010 Tax Bill $2200  (must be 55% of the full bill from the prior year)
Second Half of 2010 Tax Bill (unknown)
First Half of 2011 Tax Bill (unknown)
Partial Second Half of 2011 Tax Bill (unknown)

The contract should call for a proration premium which is typically 105% or more.  In this contract, the amount is 105%.

To figure out estimate full year 2010 bill, simply take the 2009 bill times 105%.
$4000 X 1.05 = $4200.

To figure out Second Half of 2010:

Take $4200 (total estimated 2010 bill) less the $2200 already paid for a credit of $2000 to be given at closing for this half.

To figure out estimated full year 2011 bill, simply take the 2009 bill times 105%
$4000 X 1.05 = $4200.

For 2011 you will be paying 1/2 of the $4200 for the period 1/1/2011 to 6/30/2011 or $2100

For the period or 7/1/2011 to 9/30/2011 you would pay the fraction of ((31+31+30)/365) x $4200

So our closing statement will show the following credits:

2010 Taxes 1st Paid
2010 Second Half Credit    $2000.00
2011 First Half Credit:  $2100.00
2011 Second Half Credit to 9/30/2011:  $1058.64.


Answer:  Take 2% of the purchase price.  This is an approximate annual maximum tax rate for homes in Cook County and specifically applicable to the City of Chicago.  This is used often with new homes that do not have any tax record yet.

For more information about tax prorations or to hire David Nelson as your real estate attorney, please call 877-464-6656 (877-GO-GO-NLO) or email David at

mold damage claims

mold damage claims

First of all, don’t panic!   Instead, take immediate action.  Within one week, you should have your own mold inspector preparing a report and providing a referral for mold remediation work.  Next, you should see a Plaintiff’s Real Estate Attorney who is intimately family with how to file a lawsuit based on the Illinois Real Estate Disclosure Laws.  Next, if you can afford it, have the mold re-mediated.  If remediation is not possible and the home is a loss, move out, move on and get your litigation going so that your claim is not barred by the statute of limitations.

How do I find an attorney who is a skilled Plaintiff’s Real Estate Attorney, visit IRELA, the Illinois Real Estate Lawyers Association at  and take a look at the membership.  You can also email the current President for referrals.

How do I find a good mold inspector?  First call the home inspector who did your original home inspection for a referral.  Then also consider calling two excellent long time home inspectors for their referrals:

1. Dan Brown, B & G Home Inspections, you can call him at:  312-558-1343

2. Juan Negron, you can call him at: 847-675-4613

Home much for a Mold Inspection?  $1000 or less.

Home much for remediation?  Sometimes as little as $500 depending on the severity of the problem.

Here is an example what can happen when action isn’t taken immediately.

Frank purchases a condominium for $200,000.  Unbeknownst to Frank, the Seller is Developer who is concealing a severe mold and moisture issue in the basement of the building being converted to condominiums.  Frank is buying a unit that has a first floor that is living space with all bedrooms located in the basement floor of the duplex.  Frank hires a home inspector who does not bring up mold at the time of the inspection.  Frank does a walk through of the condominium 3 days before closing and does not see mold.  Frank closes on the property.  At the closing Frank takes a out a $180,000 mortgage.  The monthly payment is $1500 including taxes and insurance.  The condominium association assessment is $150 per month.  Frank moves into the condominium 5 days after closing.  8 days after the closing, Frank smells mold, sees mold showing up through the painted drywall and becomes sick.    Frank moves out of the condominium 10 days after the closing and never returns.

The condominium association files an eviction action one year after the Frank left his condo and obtains an order of possession.  The condo association does not rent the condominium because it is unfit for habitation.  However, the condo association has possession of the condo and changes the locks barring the reentry of Frank.

Frank never speaks to his home inspection to ask about why the mold was not discovered.  Frank never hires a mold inspector and never obtains an estimated cost of remediation and/or determination of whether it is possible.

Frank does spend $5000 on a retainer to hire a law firm to sue the developer.  The law firm files a complaint and can never serve it because the Developer has fled the country to Tahiti.  Frank’s law firm has stopped work on the lawsuit because they need more money for legal fees.

Frank’s lender is threatening foreclosure and a deficiency judgment.  Frank makes $100,000 per year.

What does Frank do?  If his litigation fails, he will most like need to file for bankruptcy.  However, Frank will be forced into a Chapter 13 and with his income will most likely pay at least 40 cents on the dollar to his creditors including the mortgage for a period of 5 years.

Another option for Frank is to sue the attorney he hired for malpractice, however, this claim will be difficult because the attorneys filed a lawsuit within the time limits.

Frank is stuck in between some problems with very few good solutions.  The lesson is to immediate get the home re-inspected, get a mold inspection, get a remediation estimate and then interview 3 different attorneys to determine the best plaintiff’s attorney for the complex claim.  Although not always available, these types of lawsuits often benefit from being contingency fee suits.

For more information about this topic, general real estate issues, bankruptcy and other legal issues, please call NLO Nelson Law Office at 877-GO-GO-NLO or email to:

Can I Modify my Home Mortgage in Chapter 13 Bankruptcy?

Mrs. Free's Studios Davenport, Iowa

Mrs. Free’s Studios Davenport Iowa

Can I Modify my Home Mortgage in Chapter 13 Bankruptcy?

  • Schedule Your Free Chapter 13 Bankruptcy Home Loan Modification Consultation

Yes – you can modify your home mortgage in a Chapter 13 Bankruptcy by Stripping Off The Second Mortgage and other junior liens.

Today, you can modify your home mortgage in two ways:  Get a modification from the lender or file a Chapter 13 bankruptcy and attempt to strip off the second mortgage on your home.  Oftentimes, this will reduce the balance on your mortgage by 30%.  While this isn’t perfect, it is oftentimes, the difference between being able to keep your home or being forced to surrender it in foreclosure.

So how does this work.? First it is important to determine whether you should file bankruptcy.  Second you need to file a Chapter 13 bankruptcy.  Third, your bankruptcy attorney files an adversary procedure with the court to rule that the value of your home is less than the balance on  your first mortgage.  Fourth get the Chapter 13 plan confirmed by the court whereby the second (third, fourth, fifth and any junior mortgages) are wholly unsecured and will be paid as unsecured creditors.  At the end of the plan (60 months), the second mortgage and all other junior mortgages are released by the lender and the debtor/s is left with a home with only one mortgage.

Does this work in real life applications?  In the last year over 40% of our firms Chapter 13’s had successful plan confirmations with the second mortgage being stripped.    On average this reduced the principal by 30% on the home indebtedness.

So what is not so great?  The first mortgage still has to be paid off in full with all of the arrearages paid back over 60 months along with the costs of collection plus the first mortgage may still have a balance that is more than the home can be sold for…so why has the court allowed this to occur – the answer is in the intent of the bankruptcy code, the idea was that if home mortgages could be modified in bankruptcy, why would anybody pay their mortgage?  Therefore, to save the ability for consumer to get home mortgages from banks, the bankruptcy code strictly prohibits the modification of a home mortgage this is wholly or even partially secured even if secured by only $1.

Bottom line – Chapter 13 offers a crude type of home mortgage modification by getting rid of unsecured mortgages, however, it does not fix long term problems with a first mortgage.  If your first mortgage is OK by itself then this type of modification is for you.  If your first mortgage is still a problem, then it may be wise to simply surrender the home in the bankruptcy and let the lender take the loss.

What are we seeing now is unbelieveable – it never used to happen in the past, but it is happening now: After filing the bankruptcy  and after stripping the second mortgage, the lender on the first mortgage voluntarily modifies the first mortgage to make the plan easier.

So what is this all about?

Well…here’s the best way to describe it.  Typically, the interest rate is reduced to 2% for the first five years and it increases by 1/2% per year after that until it hits the market rate and then becomes fixed at that rate.  The kicker is that the bank will put the arrears on to the balance of the loan.  Doesn’t seem like a big deal, but it is!  If your old mortgage payment was $2400 per month and you were 10 months behind at the time of your bankruptcy filing, then you owe $24,000 in arrears.  In a typical 60 month chapter 13 plan, you will pay $24,000/60 per month to pay back these arrears.  This is $400 per month.  In this case, the bank basically put this into the balance.  So basically, you are now paying 2% interest on $24,000 over the next 30 years or so.  Around $50 per month.  The benefit is theoretically that your home if you keep it for 15 years will finally be worth more than the mortgage; you can sell it, pay off the mortgage and have a happy life.  This is all true with one caveat.  What if you have to get out of the house one year after your bankruptcy ends and you are still “underwater”   Good luck – you just entered another bankruptcy or years of garnishments.

In a nutshell – if you want to live in your house a long time and don’t have a big need to move soon and don’t believe you will be forced to move, then this is the ticket.  Basically, the bank cuts its price on loaning you the money.  But if you need to be more flexible and actually have the debt load be less immediately, then you are out of luck and better surrendering the home in bankruptcy.


Ron and Karla bought a home in 2006 for $200,000.  The first mortgage was $160,000 from Wells Fargo.  The Second Mortgage for $40,000 was from Banco Popular.  Ron and Karla were doing great until Karla lost her job in 2008.  The couple missed 8 payments.  The couple was five months into their foreclosure action when they filed a Chapter 13 Bankruptcy.

Ron and Karla hired David Nelson to file their Chapter 13.  David suggested that they keep their home, but attempt to strip off the second mortgage.  Ron and Karla agreed.

Ron and Karla make approximately $70,000 per year together and have two children.  Their budget is tight and the means test says that they need to contribute on 10% of their plan to paying unsecured creditors.

Ron and Karla have no other debts besides the home.  Their mortgage payment was $1400 on the first mortgage, $500 on the second and their tax escrow was $300 per month.

Ron and Karla were $11,200 in arrears on their first mortgage when they filed their bankruptcy.

Here is how their plan payment is figured.

$1400 for payment of the first mortgage regular payment
$300 for tax escrow payment on the first mortgage
$67  (10% of $40,000 divided by 60 months) for payment of the unsecured second mortgage
$187  ($11,200 divided by 60 months)
$1954 Subtotal
$195  Trustee Fee (10% of payment)
$2149 total payment

So how does this work out with their budget

$70,000 Gross Income Per Year
$5833 Per Month Gross
($1458)  Taxes
$4375 Net Income Per Month

$2149 Plan Payment
$250  Gas & Electric
$800  Food
$194  Clothing
$100  Laundry
$250  Medical
$502  Transportation
$130  Auto Insurance
$4375  Subtotal

Square Budget.  Home Saved.  Overall home mortgage modified by overall reduction by 20%

Bottom line – this Chapter 13 accomplishes good things.  With other applications we might have an auto loan, additional credit card debt or other unsecured debt.  For those discussions, please see my other blog postings.

For more information about bankruptcy, mortgage modification or other debt relief options, please call NLO Nelson Law Office at 877-464-6656 or email us at

Are we in the Great Depression? Or will home prices rebound soon?

The straight scoop is this:  no one really knows.  It is clear that the “recession” we are in is the deepest “recession” since the Great Depression.  However, it is still not clear whether we will not experience any growth in our economy for 10 years which is an oversimplification of what happened in the Great Depression.

Bottom line:  the Great Depression had some odd characteristics that are important to remember:  The economy “freshened” and improved and then would decline.  It went up and down for a decade.  The most troubling issue of all is that most scholars believe that only the armament build up prior to World War II got us out of the Great Depression.  Not any of the fancy programs that were designed provide stimulus.

Why is this important?

If you are severely “underwater” on your home, it may be as long as 6 years before prices even register a real increase much less get you back to “even”.  If you are long-term unemployed – which affect construction workers disproportionately, you may need to switch industries.  An example of this is Marshall Field’s  LaSalle Bank Building, which was the last building built in the Chicago Loop in 1934 with no major construction until the late 1950’s.

Another haunting comparison is the  Auburn Automobile Company which produced Auburns, Cords and Duesenburg’s.  The company survived the crash of 1929 and made through the 1937 car year when it simply had no more cash to be run.  Even with incredible innovations such as front wheel drive, it wouldn’t be until 1940 that any new money entered the economy and would have kept a company like this going with armament orders, etc.

What about my home – bottom line if your home is reasonably priced in terms of your tax, loan service and other expenses compared to rent, then it is a good value and certainly better than renting.  However, if your home loan service and loan balance are simply far beyond the comparable cost of renting, then it unfortunately becomes a smart choice to surrender the home and rent superior rental properties at reduced rates.

Why won’t lenders just adjust my balance down to a “reasonable” level so that I can survive in my home?  It seems like the best choice for everyone.  Wrong!   Banks rely on the absolute firmness and collectibility of their loan and mortgage obligations.  If a precedent was set that these loan balances could be adjusted simply because they were unreasonable due to changes in the economy, then how would a bank ever predict what risk factors and other costs they would have to build into their loans.

It is my prediction that prior to 2014, nearly 25% of all homes purchased or refinanced between 1997 and 2007 will be sold at foreclosure and that this necessary transfer of wealth will end up adjusting these over leveraged properties while protecting the legal sanctity of a contract.  Is this a good result?  From a practical standpoint – no.  However, if our system of laws break down, we will not be able to structure and control the commerce of our country.

Lastly, I believe that instead we should give judges in a Chapter 13 bankruptcy some limited ability to adjust loan balances where justified and provide a 25 year recapture period where 50% of the appreciation is recaptured back to the lender.  This allows the borrower to keep their home, this allows the bank to “give up” an existing noncollectable balance while keeping a house occupied and sharing in 50% of the potential appreciation.

We’ve got a long ways to go in this current slowdown, we don’t need anymore dams and it will be difficult to get congress to allocate money for a much needed high speed rail network.  Therefore, it’s time to look for reasonable unglamorous solutions to our economic situation.

The Bank Won’t Foreclose I Am Not Paying My Mortgage

The Bank Won’t Foreclose I Am Not Paying My Mortgage

Sometimes, lenders decide not to foreclose on homes that have delinquent home loan mortgages that are in default.  For example, Joe has a mortgage for $200,000 on his home.  His monthly payment is $1000.  $200 is escrowed each month for taxes and insurance.  Joe has not paid his mortgage payment for 6 months.  Joe is $7200 behind in his mortgage.  Ordinarily, the lender would being foreclosure proceedings beginning in the fourth month of non-payment.  Nine months later, the lender would have an order for possession and the foreclosure sheriff’s sale of the home would be confirmed and complete.

However, sometimes, a lender doesn’t want the property back.  The following are the most common reasons:
1)  The property will not be easily resold
2)  The property is occupied and is not being vandalized.
3)  The lender has documentation problems and needs to wait until they have been able to correct documentation problems.

Let’s say that you simply want it “all over”.  Then you have a problem.  Even though you are behind in the mortgage, you are still the owner and liable for any building code violations or other violations such as leaving a vacant building.  In most cases, you are best off living in the property until the lender asks you to leave.

The benefits of staying in your home:  1)  Time to save up funds to get a rental unit  2)  Time to save up funds to pay off any deficiency judgment or pay for a bankruptcy  3)  Ability to allow your family to remain in the home longer to allow children to finish high school or simply enjoy their home, family and neighbors.

Why do people hate staying in their homes?  They are anxious about the foreclosure knowing that inevitably they will be thrown out of their home.  Another reason – they just want to get away from the bad experience of owning the home and losing it due to default.  Here’s the problem – the painful staying in the home is often best financially.  Although avoiding a bankruptcy may not be possible, avoiding the financial destruction of your family is by maximizing the amount of benefit you can get from staying in the home.

Home Prices Take A Tumble In 2010 – Short Sales, Deeds In Lieu & Deficiency Judgments – NLO Nelson Law Office

Home Prices Take A Tumble In 2010 – Short Sales, Deeds In Lieu & Deficiency Judgments – NLO Nelson Law Office  It is hard to believe that between 1950 and 2008; home prices rarely climbed less than an average of 8% return.  In some years there might be no appreciation and in other years, double digit gains. The figures are hard to pin down, but if we can believe it, between 2009 and 2010 home prices in Chicago dropped 20%.  Think about it.  It’s crazy.  We’ve been told for years that these investments can’t fail and the prices never go down.  Do you remember the phrase – “better get in now before prices go up”.  The failed housing market or bubble burst has ruined realtors, loan officers and most importantly home owners who could barely afford and really weren’t qualified to buy a home.

Right now most experts believe foreclosure filings will peak in 2012 and decline thereafter.  Most experts are calling for another 15% drop in prices in this year with a flat period for many years thereafter.  What is troubling is the similarity between the great depression and our present situation.  Many people are chronically unemployed with no unemployment benefits and our government is surprisingly silent.

For our firm, we are seeing far less Chapter 7 bankruptcies where people are coming in with fees.  We think it is because people are heavily in debt, without income and just wanting to clean things up before they head back to work.  For most people it means waiting to file a Chapter 7 until just after you have been at a job for about 4 months.  This is about the lag time between starting a new job and garnishments catching up to you.

For people looking to avoid a bankruptcy but wanting to get out of their property, a short sale can be great.  The problem traditionally has been that lenders intentionally stalled to cause failures and force foreclosures.  Now, lenders are softening up as they find they can be more profitable in a short sale.  One thing you may have noticed,  nothing involved is done to benefit the borrower or preserve creditworthiness or home ownership – this is strictly an attempt to improve profitability.

A deed in lieu of foreclosure is where a borrower asks the lender to take back the property by allowing the owner to sign over the over property via deed and avoid having the bank file foreclosure.  In the old days, the property would often be sold by the bank at a price high enough to pay off the mortgage and the borrower simply walked away from a house he or she didn’t want.  Today,  lenders won’t even consider a deed in lieu unless you have failed to sell your home (for any price) for six months or sometimes a little less.   Often times, someone will buy the house as a short sale instead of having the bank take the house back through a deed in lieu.

What’s disturbing is that most borrowers face a deficiency judgment…. so what’s this.  Well, basically it’s like a credit card debt that often is $80,000 or more and most lenders SELL IT at 2 cents on the dollar to a collection agency that sues the borrower and garnishes their wages forever.  Does this sound bad?  Yes.  Unfortunately, this is exactly what is sending many good families into bankruptcy and I can’t think of a way that my clients can avoid it.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. CALL 877-GO-GO-NLO (877-464-6656) FOR A FREE BANKRUPTCY CONSULTATION TODAY! SATURDAY APPOINTMENTS ARE AVAILABLE.