If a homeowner defaults on their mortgage payments, the company can begin the foreclosure process. The truth is, however, is mortgage companies would rather avoid foreclosing and may work with a homeowner’s mortgage lawyer to come up with a better solution.

One option may be refinancing the current mortgage. The homeowner will obtain a new mortgage that allows them to pay off the current one. This new loan may be with the current mortgage holder or with a new company. If the homeowner chooses this option, they will be responsible for closing costs and any other fees that are required to create the new mortgage.

The bankruptcy process can be a complex one, which is why it is important to have a seasoned bankruptcy lawyer advocating for you. One of the issues that a petitioner may not be aware of is the types of debts that cannot be included in their bankruptcy filing. These debts include:

Child support and alimony – Bankruptcy will not eliminate a person’s legal obligation in any child support or alimony order. It also does not cover any past due obligations that the petitioner may be in arrears on.

Student loans – In the majority of bankruptcy filings, student loans – whether owed to the federal government or private lenders – cannot be discharged in bankruptcy.

Tax debt – Any debt owed to the IRS or the state is not allowed in a bankruptcy petition. In some cases, the tax agency may be willing to accept an offer in compromise or agree to a payment arrangement.

There are some circumstances where a homeowner will benefit from a loan modification. A loan modification is where a lender will restructure a mortgage so the payments are more affordable for the homeowner. This can be done by converting the interest rate from a variable to a fixed, reducing the interest rate, extending the length of the loan, and/or forbearing some of the principal balance of the loan.

While a homeowner is not required to retain a loan modification lawyer, it is often in their best interest to do so, especially if there is a potential foreclosure involved. Whenever there are any issues involving mortgage arrears and foreclosure, it is important to consult with a lawyer to find out what legal options are available to save the home.

These days, it is not uncommon for people to find they have some major issues with their credit history and/or reports. If you are having credit issues, a credit lawyer can help you take the steps to repair it.

One of the first things a credit lawyer can do is review your credit report to check for any potential errors. If there are errors or negative items, your lawyer can work to have those removed.

Other issues a credit lawyer can take care of on your behalf include negotiating with creditors and collection companies on your behalf to obtain a reduced amount on the debt you owe. If a creditor takes you to court, a credit lawyer can also represent you and ensure your rights are protected in any lawsuit.

A debt relief lawyer understands that struggling with debt be stressful enough, but when that stress is compounded by a constant barrage of phone calls and letters from creditors and debt collectors, that stress can feel absolutely overwhelming.

The good news is that as soon as your lawyer files the bankruptcy petition on your behalf, an automatic stay goes into effect. This automatic stay means that your creditors and those collection agencies are required to stop all collection attempts once they have been notified of the bankruptcy.

This notification can take a few weeks, so it is advised that if you do receive any collection calls, let the creditor know you have filed for bankruptcy and give them your case number. Your lawyer will let notify any creditors that have filed lawsuits against you.

Once creditors have been notified, if they continue their collection efforts, they can be sanctioned by the court.

One of the goals of a Chapter 13 bankruptcy is to get you back on track and current with your mortgage, vehicle payment, and other loans you may have. Some of the options your loan modification lawyer may recommend in your bankruptcy include the following:

• Lien stripping – When a homeowner has a second or third mortgage on their home or they have a home equity line of credit, they may have the legal option of eliminating them – or “stripping” them – in their bankruptcy petition. This option is usually only available if the actual value of the home is lower than the amount that is owed, often referred to as being “underwater.”
• Cramdown – The balance of a vehicle and other types of loans (other than mortgages) are often more than the actual value of the property. In these situations, the petitioner may be able to lower the amount owed to the actual value of the property. For example, if a petitioner owes $8,000 on their vehicle loan but the resale value of the vehicle is only $4,000, the loan may be reduced to $4,000 by the court.