Orlando has one of the highest rates of “under water” mortgages in the nation. This means that many central Florida families owe far more on their homes than the actual fair market value. Instead of having an investment, these folks are saddled with a liability that they cannot even sell to escape the payments. Individuals in this unfortunate situation often turn to bankruptcy to save their homes and regain some financial stability. However, the process is not easy.
Bankruptcy comes in two varieties: Chapter 7 or Chapter 13. Bankruptcy lawyers typically advise people who have significant assets to opt for Chapter 13, because this form of bankruptcy allows the debtor to restructure his or her debt and spread payments over a longer period. For low-income debtors and those without assets, Chapter 7 is often the best option, because it allows a clean start and usually can be completed in a short amount of time.
When it comes to saving the family home, however, Chapter 13 has traditionally been a superior option, because it allows the homeowner to apply for mortgage modification mediation through a federal portal. This often allows people to keep their homes in bankruptcy.
Chapter 7 now allows mortgage loan modification
Unlike Chapter 13, which requires the debtor to spread debts over a long repayment period, Chapter 7 is much quicker. In fact, most debtors can expect to have the process completed in less than six months – sometimes as quickly as four months. In the past, however, Chapter 7 debtors were unable to apply for loan modification to save their homes.
But if a person is facing bankruptcy, it stands to reason that he or she may not be able to make the existing payments without some form of modification that would allow for lower payments. New rules now permit Chapter 7 debtors to use the power of a federal court judge to require a lender to participate in mortgage modification mediation.
The benefits of Chapter 7
Chapter 7 is by far the quickest option, and it allows a clean start without drawing out payments over 3-5 years. As such, now debtors have the best of both worlds. By allowing individuals to modify their mortgage loans while still completing the bankruptcy process in just four months – the same as any other Chapter 7 proceeding – these new bankruptcy rules allow debtors the benefit of saving their homes.
Experienced Orlando bankruptcy lawyers like Amy Goodblatt were among the first to assist clients with restructuring home loan payments as part of their Chapter 7 bankruptcy plans. Don’t hesitate to reach out to Amy Goodblatt today for a consultation on your case or if you need professional assistance immediately.
Our attorneys, Amy E. Goodblatt and Tatiana Leo, have more than 55 years of combined legal experience. They are directly involved in each case and stay focused on the issues that matter most to you.
