Chapter 13 Bankruptcy is an Option if Facing Foreclosure in Baltimore
According to a July 2017 article in Market Watch, once foreclosed homes in Baltimore and around the country that were snatched up by investors are now in foreclosure again. A July study done by Market Watch discovered an increase in properties auctioned off by the government and an increase in the number of foreclosures. Institutional investors began buying delinquent property via government auctions in 2010.
The government auctions seemed like a win-win situation. Homeowners whose mortgage were bought at an extremely low rate could get a loan modification. Investors would obtain profitable assets and communities would continue to obtain tax revenues. Ultimately, neighborhoods would be revitalized. The homes auctioned off came from the Department of Housing and Urban Development. Fannie Mae was the first to auction foreclosed homes. Freddie Mac soon followed.
The auctions were intended to reduce the number of seriously delinquent government mortgages and help stabilize neighborhoods. For instance, a private equity firm has foreclosed one in about 2,000 homeowners as of July 2017. It has increased its foreclosure rate since 2013. The overall foreclosure rate in the U.S. fell 22% in the second quarter, an 11-year low.
A Baltimore homeowner interviewed for the article has lived in her home for 18 years and has had her mortgage change ownership several times. She obtained a loan modification a few years ago and was charged $1,000, but did not receive a decrease in monthly interest rate payments.
She tried again in 2017. She did receive a lower monthly bill, but received a one-time charge of $3,000. She continues to struggle to track her mortgage’s owner.
Bankruptcy is a Legal Option to Save Property from Foreclosure in Baltimore
Chapter 13 bankruptcy, also called wage earner’s bankruptcy, is only offered by the federal government to help a debtor obtain a financial fresh start. A debtor is anyone who files for bankruptcy. This bankruptcy chapter allows a debtor to pay creditors over a three to five-year period. It allows them to get caught up on their bills without facing the devastating consequences of going into debt, such as:
- Property auction
- Legal judgments
- Utility shut off
- Wage garnishment
Chapter 13 Bankruptcy Comes with an Automatic Stay
The reason Chapter 13 bankruptcy is such a powerful tool is that it comes with an automatic stay. The automatic stay prevents a creditor from starting, continuing, or concluding any legal process of collecting its debts. If a mortgage lender files a foreclosure petition, it is automatically stopped. If a debtor’s paycheck is getting garnished for a judgment, that is immediately stopped, as well.
Get Help with Your Chapter 13 Bankruptcy from Hassan, Hassan & Tuchman, PA
Bankruptcy is a complicated process. It involves getting needed papers together like your tax returns. It also involves completing a Means Test. This is not a written test, but a way to determine if you are eligible for Chapter 13 instead of Chapter 7. Contact us to learn more about which form of bankruptcy is right for you.