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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33369
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I am in forclosure and will have to go to mediation in 3 weeks.

Resolved Question:

I am in forclosure and will have to go to mediation in 3 weeks. Will filing bankruptcy help me out of the situation.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 1 year ago.
A Chapter 7 (liquidation of all assets) Bankruptcy will only slow down your foreclosure for about 60 days. A Chapter 13 (reorganization) Bankruptcy can sometimes stop your foreclosure for up to five years. Eventually, however, if you cannot catch up with your payments (or, in limited cases, if you have a 2nd mortgage, and your property is worth less than your 1st mortgage), then you will have to either sell the property, or suffer the foreclosure. The good thing about the Chapter 13 is that you can hope that your property value will increase during the duration of the 5 year plan, and if it does, then you may be able to sell the property to pay off the mortgage, so that you will never actually have been foreclosed.

Sometimes, however, it's better to just file Chapter 7, get rid of your debts, and move on with your life. Five years can be a long time, while you're living under the thumb of the bankruptcy trustee's control.

Everyone's circumstance is different. But, most consumer bankruptcy attorneys provide free first consultations, so it's worth visiting with a local bankruptcy lawyer and discussing your full financial circumstances to see if you fit in one of the categories where bankruptcy could really make a positive difference.

For a competent bankruptcy lawyer referral, see this link.

Please let me know if you need further clarification or assistance.
Customer: replied 1 year ago.


So in mediation hearing what happens? Does it benefit the property owner or that more beneficial to the Mortgage company?


 


As far as bankruptcy, do they give you five years to repay the arrears?

Expert:  socrateaser replied 1 year ago.
In general, the loan servicer and owner meet with a mediator who tries to arrange a settlement that will get the owner to vacate the property without a formal foreclosure taking place. Sometimes the servicer will offer "cash for keys" to get the owner to agree to leave quietly. If no settlement can be reached, then the foreclosure process will continue. If there is a settlement, the parties will sign an agreement under which the owner agrees to vacate by a future date, in exchange for some amount of money.

A formal foreclosure will cost the loan servicer about $7,500-$10,000. So, that's your negotiating room, if you want to try to use it to get some cash.

Re bankruptcy, the plan usually is written so that the payments remain where they currently are through the five year plan, and then there is a balloon for the unpaid balance that has accrued before and during the bankruptcy. Most borrowers cannot make up the balance due, unless their property increases substantially in value. But, while the bankruptcy plan is in force, you can stay in the property.

Hope this helps.
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33369
Experience: Attorney and Real Estate Broker -- Retired (mostly)
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