Home Mortgage Debt Settlement Options

Mortgage debt settlement is a pressing issue for many families in Chicagoland. Illinois has one of the highest home foreclosure rates in the country. Mostly, that’s because, under state law, banks can begin the foreclosure process after just one missed payment. As outlined below, debt settlement options are available in these situations. However, these options are complex.

So, only the best Chicago bankruptcy lawyer should handle debt settlement matters. Frankly, debt settlement with a cut-rate or inexperienced lawyer is a waste of time at best. At worst, such debt settlement practices make a bad financial situation even worse. Additionally, if debt settlement doesn’t work for whatever reason, only a Chicago bankruptcy lawyer is prepared to immediately take your case to the next level.

Statute of Limitations

Expiration of the statute of limitations is one example of a legal loophole. This loophole is often effective in past-due home mortgage situations.

Usually, the home foreclosure process begins with a notice of intent to accelerate the debt. Frequently, banks use these notices as scare tactics. Usually, the approach works. The homeowner cures the delinquency. Then, both the bank and the homeowner drop the matter.

However, in many cases, the statute of limitations, which is usually four years, keeps running in these situations. If the bank doesn’t officially cancel the acceleration notice or take other action to close the matter, if the statute of limitations runs, the bank loses the right to take adverse action against the homeowner. In other words, the homeowner gets a free house.

Evidence of Mortgage Fraud

Mortgage fraud is a related matter. During the early 2000s, many banks worked with mortgage brokers who convinced people to sign papers they didn’t understand and buy houses they couldn’t afford. Mortgage broker fraud may not invalidate a loan in court.

However, a fraud action gives a bank a very public black eye. Most banks are willing to do almost anything to avoid that negative publicity.

The Bankruptcy Bluff

Finally, we would be thoroughly remiss if we didn’t discuss the bankruptcy bluff. Many homeowners have a crippling fear of bankruptcy that prevents them from even considering such action.

Other homeowners don’t qualify under the complex Chapter 7 or Chapter 13 rules. Chapter 7 debtors must earn less than average, and debt ceilings apply in Chapter 13 cases.

However, the bank doesn’t know bankruptcy is not an option, for whatever reason. Frequently, if a Chicago bankruptcy lawyer mentions the B-word, banks get serious. They know if the homeowner files bankruptcy, the bank will probably end up with a used house that can only fetch a fraction of its fair market value at auction.

Debt settlement companies cannot effectively sell this bliss. The bank must believe that if it doesn’t make a deal with a lawyer, the lawyer will hit “send” on an electronic bankruptcy petition filing.

Foreclosure Avoidance Strategies

A few final words about non-bankruptcy foreclosure avoidance options. These options often include a short sale, deed in lieu of foreclosure, and cash for keys.

The bank may approve a short sale. The homeowner sells the home for less than the loan value, and the bank eats the difference. DILF is basically voluntary foreclosure. The owner spares the bank from going through the foreclosure process by surrendering the deed. Cash for keys is a program that pays homeowners for cleaning out their homes before they move out.

Usually, these options look better on credit reports than foreclosure. Bankruptcy usually looks even better because it shows the debtor made more of an effort to repay and resolve debt.

Work With a Thorough Cook County Lawyer

No matter what kind of financial problem you have, there’s a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Virtual, home, and after-hours visits  are available.