Chicago Bankruptcy Attorneys Say Government Loan Program Helped Make Foreclosure Crisis Worse
The word is out - the $75 billion loan modification program meant to protect homeowners from foreclosure has actually made the situation worse.
Out of the millions of Americans facing foreclosure, Uncle Sam's program modified mortgages for just a few hundred thousand - some of which ended up going into foreclosure anyway. Now critics are saying the program has worsened the crisis by leading us on. Instead of saving money for alternatives to modification or, worst case scenario, for moving to a new residence, many folks kept holding out hope that modification would save them - until it was too late.
Many homeowners simply can't afford to keep their homes - and unless they can get rid of debt or change their lifestyle, a modification that barely lowers their mortgage isn't going to make much difference. Fortunately, that's where Chapter 13 bankruptcy comes in, according to Chicago bankruptcy attorneys.
Filing for Chapter 13 bankruptcy triggers something called the automatic stay, a legal action that stops the foreclosure process while you reduce or eliminate debts. It's a step that could help millions of Americans keep their homes - especially important right now.
See, banks have been taking advantage of the President's loan program, using it as an excuse to avoid writing off losses that were in the process of being "evaluated" for modification (i.e. being considered, but ultimately rejected). Because no one knows the true number of foreclosures, home values are at artificial levels - meaning recovery is postponed, according to the New York Times.
Until banks restore equity rather than just lower payments, homeowners will continue to face foreclosures. But you don't have to wait on Uncle Sam to save your house. The sooner you take action, the more likely you'll be able to keep a roof over your head. Bankruptcy can not only protect you from the bank, but provide a realistic way to lower or even eliminate debts. With less debt to worry about, you'll have an easier time paying the mortgage, no matter what your monthly obligation.
Find out if a bankruptcy plan is your alternative to foreclosure for free at DebtStoppers. Just sign up for a free personal debt analysis with a Chicago bankruptcy attorney or join us at a free community financial workshop. Don't wait until it's too late - find out how to stop foreclosure today.