Avoid Foreclosure During Coronavirus Pandemic
The vast majority of Americans have had their lives turned upside down by the coronavirus pandemic. They have not been able to perform their daily activities and go on any sort of vacation. Many people have also lost their jobs or faced some other sort of economic hardship. These individuals have been unable to pay all kinds of bills. Perhaps the most important bill for the vast majority of Americans to pay is their mortgage. These people want to do whatever they can to avoid foreclosure and stay in their homes. They may have to take extraordinary steps over the next few months in order to do so.
Access Temporary Mortgage Relief
One of the fastest ways to avoid foreclosure during the current COVID-19 pandemic is to access temporary mortgage relief. Millions of Americans have been thrown out of work or had their hours greatly reduced. These men and women are on hard times and a large number of American companies know this. Many mortgage companies have introduced a wide variety of plans to help people pay off their mortgages and stay in their homes. A lender has several reasons to take these steps. They want to retain customers and aid their image through such a stressful period. These companies also want to keep within government regulations. A large number of areas banned foreclosures and evictions for a significant period of time. Holding the court hearings and auctions associated with these events would have violated social distancing guidelines in places such as Long Island and New York and been dangerous for a number of people. In addition, the government also made billions of dollars in loans available to companies that have faced economic hardship from the pandemic. Many of the losses that mortgage companies suffer helping out their clients can be covered by a loan from the federal government.
Home owners should try as hard as they can to structure their payments and stretch their budgets to where they do not have to foreclose on their house. Foreclosure is a terrible process that no family wants to endure. They are physically removed from their house with all of their possessions. Individuals have to find somewhere to live with little to no warning. They have a black mark on their credit that they cannot take off for several years. A person would often rather avoid all of their other payments then fall behind on their house. Avoiding many payments involve a company sending in threatening letters and bill collections phone calls. Not paying an internet bill may lead to an individual not having internet and having to go to the local cafe in order to get online. Having a car repossessed forces an individual to potentially take public transit to work. But all of these negative consequences pale in comparison to what would happen if an individual did not have their home anymore. Most people who suffer through foreclosure have to live in expensive motels until they can find an apartment of some kind. Many of the people who are foreclosed upon simply end up homeless. This is one of the worst financial tragedies that a person can endure and it does not have to happen in many cases.
Home Loan Modification
Some home owners will be eligible for home loan modification in order to help with avoiding foreclosure. This modification involves a home owner changing the structure of their loan to avoid current payments. It is particularly beneficial for individuals who are currently out of work but hope to go back soon. They can take the money they have now, save up, and eventually use extra income to pay off their mortgage at a later date. There are two main strategies that these companies have used to aid with this process. One of these is deferment. Deferment involves allowing a person to avoid a few mortgage payments now and simply tacking those payments onto the end of the mortgage. The bank may take a short-term hit but does not lose money in the long term. Individuals also expect to have more money later on and do not have to suffer any problems with their credit in most instances. The other approach is forbearance. In forbearance, an individual misses several payments and then have to pay them all back in a lump sum in the near future. If an individual can, they should emphasize taking deferment over forbearance in all cases. Many individuals cannot pay the lump sum involved in forbearance. But if it is all that a mortgage company will offer, it is certainly better than risking foreclosure with missed payments.
Filing for Bankruptcy to Prevent Foreclosure
In some rare cases, an individual’s best option to avoid foreclosure is to declare some form of bankruptcy. This status is when a court declares that a person does not have the capacity to pay off their debts as they are currently constituted. There are two main options for an individual after the bankruptcy process. In Chapter 13 bankruptcy, a person sets up some sort of payment or refinance plan for at least a portion of their debt over a period of three to five years. In Chapter 7 bankruptcy, they often do not pay off a large number of their debts. Those debts are wiped clean. Bankruptcy is a problematic process for many reasons. First, it harms a person’s credit immensely. They will often have this black stain on their credit report for many years. The records of their bankruptcy will be in the public domain for anyone to access. Also, there is no absolute guarantee that they will be able to keep their home. Some forms of bankruptcy do not allow a person to keep their home if they do not have a certain amount of equity. A person is basically trusting their attorney and a judge to make the best decision that helps them retain their home and avoid foreclosure. This risk is massive and is not a level of risk that most individuals should take on with their home.
Avoid Foreclosure Scams
Any individual who is potentially in the foreclosure process must look out for scams that try to take advantage of them. These scams come in many forms and mostly revolve around a person’s desire to become whole with their mortgage company. Some scams promise to get an individual out of their underwater mortgage and many other debts. In a common form of the scam, the debt settlement agency advises that a person stop paying off all of their debts for a period of several months. Then, the agency advises that a person comes back with an offer to settle for all of those debts that they did not pay. The theory behind this is that the company will want something rather than nothing and negotiate with an individual. But banks often want to keep the mindset of people paying debts on time rather than gain every single time they can from a potential borrower. Therefore, they will simply foreclosed on an individual if they go too long without making their payments. This approach often costs a person several thousand dollars and is not particularly helpful in the long run.
Hire an Experienced Attorney for Guidance
Many of the options listed to help with foreclosure involve complex plans and the legal process. This process is especially true of bankruptcy. There are a number of concrete steps to take with bankruptcy that a person has to make sure that they follow. A lawyer can help with all of these steps. He or she can help a person settle their debts or argue their case in front of the judge. An experienced Long Island attorney can help you avoid potential foreclosure scams. Our team can represent you in any financial dealings that they have and can help shine the way forward on getting out of what looks to be insurmountable debt.
Take Action Today
Anyone who is looking at foreclosure is in a precarious position financially. They are understandably scared and perhaps desperate. These individuals are prime targets for a wide variety of scams and cons. They have to remain careful and diligent. They also need to secure the help of an experienced real estate attorney. For more information on how to avoid foreclosure during these difficult times, contact the office of Adam C. Gomerman today and speak with our experience Long Island legal team.