Loss of a job, divorce, medical emergencies and predatory lending practices put many at risk of losing their homes. Every year I help rescue dozens of families from the perils of foreclosure. In my experience, I have learned that the first mistake not to make when in danger of losing your home is to rely on the bank. Although it is required by both federal and state law for lenders to make a good-faith effort to provide options to homeowners facing foreclosure, the truth is most banks and mortgage companies have neither the resources nor the incentive to help you. Despite what they may promise, banks rarely resolve or refinance loans for borrowers who are already in default on their mortgages.
Fortunately, the law provides a way to stop foreclosure. It is Chapter 13 bankruptcy. Filing for Chapter 13 bankruptcy stops the foreclosure process and allows you to repay past due mortgage payments over either a three-year or five-year period. In a Chapter 13 bankruptcy, you can catch up on your back payments while you continue to make your regular mortgage payments.
In New York State, the average foreclosure process lasts approximately 15 months from the date of the missed payment to the sale of the home at auction. Filing for bankruptcy protection stops the foreclosure at any stage up until the auction. Although you may have ample time to stop a foreclosure, the longer you wait, the more difficult it will be to catch up in a Chapter 13 plan.
For a free consultation to find out if you are eligible for Chapter 13 bankruptcy protection, call Buffalo foreclosure attorney Thomas Denny at (716)800-1234.
Many times I am asked the question, “How long does bankruptcy stay on your credit report?” While a Chapter 7 will remain on your credit report for ten years and a Chapter 13 for seven years, bankruptcy is not necessarily a death sentence. In fact, it can improve your credit.
As a bankruptcy attorney, I use a credit report that displays my clients’ current credit scores, along with an estimate of what their scores will be in approximately one year after bankruptcy. In most cases, their scores increase an average of 125-140 points. The rare exception is the client who has been current on his or her payments but is simply overwhelmed with debt. The majority, however, are in default on all or most of their debts when they file for bankruptcy.
The fundamental reason bankruptcy raises your credit score is that it lowers your debt-to-income ratio. To calculate your debt-to-income ratio, you divide your debt payments by your gross monthly income. The lower your debt-to-income ratio, the more willing creditors are to lend you money. Since all or most of your debts are now discharged, after bankruptcy, you have more disposable income to pay new debts. The fact that bankruptcy can improve your credit may explain why bankruptcy filers often get offers for credit cards and car loans within weeks after their cases are closed.
Credit is not indicative of your character or worth. It is simply a measure of your ability to borrow money, i.e., incur new debt. Bankruptcy is intended to give debtors a fresh start by freeing them from the burdens of debt. Thus, it puts them in a better financial position – one in which they may not have to continue to borrow money to make ends meet.
To find out if the Law Office of Thomas Denny can help better your financial situation, call (716) 800-1234 to schedule a free consultation.