Michigan Bankruptcy Lawyers Are Lying To You About Foreclosures. Bankruptcy Does NOT Stop A Foreclosure!
Let’s be honest. Michigan Bankruptcy Lawyers are business owners. They want your money. They will sing and dance the Jitterbug on their desk to convince you to give them your hard-earned cash. Matter of fact, like most Michigan lawyers there is little they won’t say or do for you to hand over your hard earned dough.
Your bankruptcy lawyer is lying to you if he or she claims they can stop a foreclosure with a bankruptcy. This is not entirely true. A bankruptcy can only delay the foreclosure. This is because all a bankruptcy can do is extinguish the promissory note. It does not extinguish the mortgage which is the actual lien on your house.
If bankruptcy becomes your only option, then you MUST do it prior to the Sheriff’s Sale. YOU CAN NOT SAVE YOUR HOME USING BANKRUPTCY DURING MICHIGAN’S 6-MONTH REDEMPTION PERIOD OR DURING THE EVICTION STAGE. This is because you no longer are on title to the home.
Michigan bankruptcy lawyers are lying to you if they tell you they can save the house during or after the Sheriff’s Sale.
You could find yourself hiring a foreclosure attorney after wasting thousands of dollars on Michigan Bankruptcy Lawyers. You could also find yourself with both a foreclosure and a bankruptcy on your credit report.
Michigan Bankruptcy Lawyers also won’t explain to you that a bankruptcy stains your credit report for ten years.
A foreclosure only stays on your credit report for 7 years. However, you can usually qualify for a new mortgage within 2-3 years after a foreclosure. As a result, negotiating a loan modification with a foreclosure attorney or walking away is a better strategy than bankruptcy. Although, you do run the risk of the lender coming after you for a deficiency judgment.
Reaffirming Your Mortgage In Bankruptcy
Reaffirming your mortgage means the mortgage will not be included in the bankruptcy. Hence, the mortgage in foreclosure is off the table in the bankruptcy. This defeats the purpose of fighting the foreclosure in bankruptcy court.
Most Michigan bankruptcy lawyers use an assembly line process as a business model. So they will encourage you to reaffirm your mortgage. They don’t want to spend hours negotiating a loan modification with your lender when they could be making money. They also assume you don’t have the cash to do an adversarial proceeding in federal court.
If you reaffirm your mortgage in bankruptcy, you will also be required to make your mortgage payments when your Chapter 7 bankruptcy is discharged usually at a higher rate and payment.
A Chapter 13 bankruptcy works differently. The bankruptcy trustee will require you to pay your original mortgage payment plus the renegotiated payment for your other debt.
Mortgage lenders can also require you to resume making payments immediately by asking the bankruptcy judge to lift the stay.
One of two things can happen.
Several post-Chapter 7 MFI-Miami clients have received disturbing notices from their lenders. The notices inform them their interest rate and payment were being jacked up. I mean way up. From 4%-5% to 8%-10% causing their payments to go through the roof.
The homeowner is now at the mercy of their lender. The homeowner is forced to accept these terms or endure another foreclosure.
Lenders would rather take a more direct approach. In most cases, lenders will just move in for the quick kill and resume the foreclosure. Lenders can and will foreclose on the mortgage lien placed on the property.
Lenders will do the same thing with people who file Chapter 13 bankruptcy. Yet, they will usually wait out the five years of the Chapter 13 protection. They will use the pre-bankruptcy arrearages as the excuse. Learn about your options before filing bankruptcy. It could save you thousands of dollars.