Subprime lending practices in recent years have left thousands of families with mortgages they can’t afford, on houses that have lost value. The Center for Responsible Lending, a nonprofit research and policy organization, has projected that 2.2 million homeowners will lose their homes to foreclosure nationwide. As selling and refinancing both become more difficult, many people are being forced to declare bankruptcy in order to avoid foreclosure.
"The people filing today are more educated and more sophisticated," said bankruptcy attorney Robert A. Higgins of Benbrook, TX. "Money has been so loose that people have bought houses they can’t afford."
Filing bankruptcy is one way to keep a roof over one’s head. When a homeowner files a Chapter 13 bankruptcy the mortgage lender must stop any pending foreclosure, if the bankruptcy is filed before the final foreclosure deadline.
People who didn’t ask enough questions or read the fine print when they obtained their mortgages stand a better chance of getting on their feet if they approach bankruptcy better informed and better represented, according to Candy Marshall, president of Suite Solutions (www.suitesolutions.info).
"Choosing a good bankruptcy attorney is extremely important. This is one area where experience really counts," said Marshall, whose Los Alamitos, CA- based firm provides online credit reports and services to bankruptcy attorneys around the country.
"It’s not like finding a good doctor or a good decorator," she points out. "Most people who find themselves in this position are not going to be asking around at cocktail parties and kids’ soccer games for a referral. They don’t know where to look or what to look for in finding the professional guidance they really need at this point."
Bankruptcy practice has a bit of a stigma, according to attorney Higgins.
"People resort to looking in the phone book and watching late night TV commercials," he said. "People facing bankruptcy often find themselves up late at night."
From Marshall and some experienced bankruptcy practitioners, here are tips for not getting burned another time:
Don’t make assumptions. The bankruptcy reform law of 2005 has created confusion in the minds of consumers, said Jeffrey Tromberg of the Florida Debt Relief Center in Fort Lauderdale, FL. "Many people assume that they can’t file bankruptcy," he said. Some believe that they will not be able to keep their house or other possessions. Some are under the impression that if they file Chapter 13 they will have to pay all their creditors in full. And many others assume that bankruptcy is their only alternative, when they may have better options.
Do a little research. Consumer-oriented information about bankruptcy abounds on the web.
Don’t shop for the lowest price. "What matters more is finding an attorney that specializes in consumer bankruptcy law," Candy Marshall said. "Attorneys who handle high numbers of bankruptcies every year tend to be the best informed about the law, have the best advice to provide, and run the most efficient bankruptcy practices. These factors combine to give you the best value in the long run."
"If you only shop price, what you get is young and inexperienced, or else guys who hire the work out," Robert Higgins said. "When people go for the lowest price, they don’t get the results they want."
Don’t delay. If you’re finding yourself unable to make your mortgage payments, it’s time to take action. State laws vary, but in some states the lender can demand that the entire loan must be repaid if there is one missed payment.
"It’s better to get professional help before you really get in a bind," Higgins said. "An experienced bankruptcy attorney can help you protect your property and look at alternatives to bankruptcy."
Choose wisely. Once you have a short list – perhaps referrals from your family attorney, your CPA, your state’s bar association, or names you have gathered online — call for an appointment. Be prepared to give the attorney a concise picture of your financial situation. And don’t hesitate to ask questions of your own. How many bankruptcy cases does the attorney handle each year? How does the attorney keep him or herself informed about new developments in the industry and in the law? What measures does the firm take to keep costs down for clients? How will you be sure that bankruptcy really will wipe the slate clean, and give you a fresh start?"
"I’ve seen it so often, people finding out well after the bankruptcy has been discharged that there are still liens and liabilities outstanding," Marshall said. "The way they find out is when they try to buy a home or a car and their credit is checked. Then they can’t get the favorable interest rates they were counting on, or they may not be able to get the loan at all."
Marshall advises everyone who files bankruptcy to obtain their own free credit reports 60 days after the bankruptcy discharge. Consumers can obtain a free credit report once every 12 months. www.annualcreditreport.com.
The best way to be sure that all creditors are listed on the bankruptcy petition is for the debtor to authorize the bankruptcy attorney to get credit reports that include information from all three national credit bureaus – Experian, TransUnion Equifax, as well as public record information, she said.
"Credit reports are an important safety net," Tromberg said, "and getting the downloadable reports through Suite Solutions is something that allows us to keep our costs down because it eliminates the need to manually enter all that information on bankruptcy petitions."
"Prior to the law change if a debtor mistakenly left a creditor out they still had the opportunity to receive a discharge under most circumstances," Higgins said, adding that bankruptcy court judges have become much stricter since the 2005 reform law. "Now it’s very important that people run through all the traps and list all creditors. I would say that not obtaining credit reports for clients approaches malpractice."
Consider chemistry. Finally, as in engaging any professional, compatibility counts. If you feel uncomfortable with the first attorney you talk to, if the personality grates or the values expressed raise a red flag, keep looking. As Jeffrey Tromberg says, "When filing chapter 13, you’re going to be married to your attorney for up to five years."
Media Contact: Candy Marshall President of Suite Solutions 877-311-1234 candy@suitesolutions.info SOURCE Suite Solutions