By Christopher C. Carr, Esq. Chester County bankruptcy attorney.
Tel: 610-380-7969 Email: firstname.lastname@example.org Website:westchesterbankruptcyattorney.org
O is for Options or Other Alternatives to/in Bankruptcy.
If you are behind on bills or can’t afford your mortgage payments, filing a consumer bankruptcy is certainly one option to consider. You can read my Rocket Lawyer blog: Filing Bankruptcy: Pros and Cons to learn more about the types of bankruptcies. However, some people do not wish to file bankruptcy for a variety of reasons and there are certainly circumstances under which filing a consumer bankruptcy is NOT advisable. Supra Lawyer lists 7 such reasons. For those clients who cannot or will not declare bankruptcy, there are alternatives not requiring a bankruptcy filing , including:
- Debt Settlement (AKA Debt Management): Debt Settlement offers a structured debt repayment plan, whereby you pay only a portion of the original debt. This is not the same as debt consolidation where one big debt simply replaces a lot of little ones. Oftentimes, you pay a budgetable fixed sum every month for from 3-5 years and the servicer uses that fund to settle with the creditors as it builds up. It is important however, to ensure that you are dealing with a reputable organization before “investing” with any such entity. (The FTC has recently revised the Telemarketing Sales Rule to encompass debt settlement companies which will hopefully bring some regulation to this industry.)
- Mortgage Modification (including Home Affordable): If you own a home and do not wish or need to file a Chapter 13 Bankruptcy, a mortgage modification may be a better option than bankruptcy as the filing of the HAMP Application will also avoid mortgage foreclosure while in consideration by the Lender. The government is attempting to streamline this process and, as the name implies, make monthly rates far more affordable for those who qualify by requiring banks which took bailout money to offer the Home Affordable Loan (HAMP). Others have joined the program voluntarily seeking to take advantages of the financial incentives being paid by the government. However, the program has been moving very slowly to date because it has been left up to the banks to administer. For those who do not qualify because of income or other reasons or because their bank simply does not offer a HAMP, there are usually conventional programs offered by the lenders, typically with less favorable terms. There are also special programs available for those who have Fannie Mae or Freddy Mac backed loans.
- Debt Settlement & Mortgage Modification: a potent combination for the in debt home owner may well be to combine a debt settlement program to reduce unsecured debt with a mortgage modification to reduce monthly mortgage payments, as these in combination can resolve most of the pressing debt issues for many homeowners.
- Other Programs: There may be other alternatives for homeowners, especially for those who cannot take advantage of any of the above programs and are willing to enter into a short sale or deed in lieu of foreclosure and exit gracefully from their homes. In addition, there may be short or long term aid available to eligible homeowners at the state or local level, such as the Act 91 (HEMAP) program in Pennsylvania. (Unfotunately, word is that there is no longer funding available under this program which was partially federally funded.)
- Bankruptcy as a Last Resort: Properly speaking, bankruptcy is not always a last resort. In fact, consumer bankruptcy can be used by eligible persons not otherwise in need of a “fresh start” to effect such things as stripping off junior mortgages; reducing high auto payments: removing a large debt load or dealing with a significant arrears on a residence. However, it is important to recognize that the eligible debtor who has tried and failed to utilize one or more of the above programs, may still avail themselves of bankruptcy as a last resort, to save their home, car and/or seek protection from their creditors. In addition, in certain circumstances a bankruptcy working in combination with one of the other above options, for example a Chapter 7 bankruptcy in concert with a mortgage modification, may be a potent option. In addition, a debtor who is current on their mortgage payments under most circumstances may exercise the “retain and pay” option to keep their home, under Section 521 (a) (2) of the Bankruptcy Code which remains largely intact after the 2005 amendments to the Bankruptcy Code.
The key point is that each debtor’s situation is unique and deserves special consideration. Further, because the process is hardly ever as smooth as it is supposed to be because of the complexities and pitfalls involved, it is advisable to consult a competent and compassionate attorney who has experience in bankruptcies and/or in negotiating modifications to guide you through the process and help you properly complete the paperwork.
Law Offices of Christopher C. Carr, MBA, P.C., is a quality bankruptcy and debt relief practice, located in Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at email@example.com today!
I also provide Mortgage Modification Services.
©Christopher C. Carr, Attorney at Law 2009, 2012, All Rights Reserved