Prevent Foreclosure in Michigan. Restructuring Your Mortgage and Other Debts

Many times people fall into foreclosure because of an increased mortgage payment that they cannot afford or  issues elsewhere in their monthly budget. By restructuring aspects of your mortgage or other bills, you can bring your budget back into alignment in order to afford your mortgage payments.

The Chapter 13 provides many unique avenues to restructure your mortgage and other debts to improve your budget and credit.

• Loan Modification:   Perhaps you have tried unsuccessfully to work with your lender on a loan modification.  Since the process is entirely voluntary for the banks, you may have felt powerless to get the revised terms you desire.

Through the Chapter 13 process, our attorneys have had much success in negotiating successful loan modifications with mortgage lenders.  A Chapter 13 program provides additional benefits that make it advantageous to seek a loan modification through the Chapter 13 plan, including:

• Court oversight of the process:  A Judge and Trustee will keep all parties accountable for the process.
• Home Affordable Modification Program (HAMP) protection:  Service’s must consider borrowers in active bankruptcies for HAMP modifications.
• Team of professionals dedicated to improving your finances. Our attorneys will deal directly with the law team at the mortgage company or assigned counsel; an avenue hard to acquire otherwise.

• Escrow Acceleration:  Escrow acceleration occurs when the mortgage company advances or pays for property taxes and/or homeowners insurance they have not previously collected through the monthly mortgage payments. In this circumstance, the mortgage company typically wants to recoup the funds they advanced within a six to 12 month time period.   This can often dramatically increase a monthly mortgage payment and for most people, makes their budget unbalanced.

Through the Chapter 13 plan, we can spread this escrow deficiency over the life of the plan (36 – 60 months), which will lower the monthly payment. In addition to this extended time, the escrow deficiency is paid back at 0% interest with no continued penalties.

• Second Mortgage or Home Equity Loan:   We can legally remove your second mortgage or home equity loan through the Chapter 13 in a process called “Lien Stripping.”. This will convert the second mortgage or equity loan to unsecured debt. The benefits of this are as follows:
  • This will create a lower monthly payment, overall, going toward your mortgage.
  • Under the terms of a Chapter 13, we can often eliminate a portion, if not the majority, of all unsecured debts, including the stripped lien.
  • The stripped lien would then convert to 0% interest.
  • In addition, all payments are deferred to your unsecured creditors (including the stripped lien) until you are caught up on your secured obligations such as your first mortgage, vehicle, etc.

• Mortgage Arrearages:  All mortgage arrearages are reduced to 0% interest.  There are also no continued late penalties assessed by the mortgage company.

• Adjustable Rate Mortgages:  Under the terms of the Chapter 13, our attorneys can propose a fixed or lower interest rate. Under the current laws, the mortgage company is not bound to our proposed terms.

But, their leverage of foreclosure is removed with the filing of the reorganization so they are typically more likely to negotiate. Our Chapter 13 attorneys can also propose to modify the loan to a fixed rate for the duration of the plan.

• Other Debt Restructuring
  • Vehicle loan:  We can reduce the interest rate, extend the terms of the loan and possibly reduce the balance you owe depending on how long you have financed the vehicle.
  • Unsecured debt, such as credit cards or medical bills:  The debts are deferred until you are caught up on your mortgage payments and paid back at 0% interest.
  • Rental Property:  We can reduce what you owe on your rental property to the current market value.  At the completion of the 36-60 month repayment program, you will own the property free and clear.

Call us today for a free consultation, with over 50 years experience we can make sure the right decision is made. 734-722-2999