The sign on the window of our office says we are bankruptcy attorneys in Indiana. But, not surprisingly, when people come in to talk to me, one of the first things on their minds is how to – and whether to — keep their homes and avoid foreclosure. So, either along with bankruptcy or just by itself, I end up talking to a lot of people about foreclosures. Not only do people worry about having to move and get into more modest living quarters, people are afraid of foreclosure for good reason. They know that if their mortgage lender forecloses on the house, they’ll probably have trouble buying another home, even a much smaller one, and they might even have trouble signing a lease with a landlord who rents out a home or an apartment.
That’s where we come in, meaning myself and the other experienced bankruptcy attorneys who work with me. Often I become the compromise cowboy, the go-between,helping my clients get the mortgage company to settle for a plan that is not perfect for either side, but which helps everybody in the long run.
One kind of plan we always at least try to discuss with the mortgage company is called a short sale. In a short sale, the lender holds off foreclosing until you sell your house. It’s quite possible that you owe more on the mortgage than you can get for house, meaning you’re “short”. Sometimes, even if that’s the case, the lender agrees to let you off the hook for the rest of the money. Why would they agree to that? The truth is, quite often the mortgage company doesn’t want to spend the time and incur the cost of foreclosure proceedings.
A second type of compromise plan is called a “deed in lieu of foreclosure”. This means the owner turns over the house to the lender and walks away without owing anything more. The lender then sells the house and keeps whatever money they get for it.
I keep reminding you in my blog that some people who file bankruptcy can stay in their homes without using either of these compromises. Again, it depends on the situation. The bankruptcy laws in Indiana encourage compromises, and, for sure, so do I!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg