HAMP is usually the first stop for homeowners trying to save their home. They fill out a ton of paperwork and then wait – and wait — for a response from the lender. The lucky ones are told right off that they don’t qualify for a mortgage modification under HAMP; but other unfortunate homeowners go through the largely disappointing process of temporary (trial) mortgage modifications only to face foreclosure after a permanent modification is denied. Yes, some permanent HAMP modifications do happen, but even some proponents of HAMP have admitted that the program has missed the mark.
So how does a homeowner use bankruptcy to save them from a HAMP disaster? Let’s take a look at a few tips:
As soon as you discover you have been denied a permanent mortgage modification, realize that you will need to pay an arrearage on the payments you didn’t make. You made payments? Most likely only partial mortgage payments due to the trial modifications, now you will need to pay off the portion you didn’t pay in the past 90 days. Most people can’t afford that so they end up in foreclosure . There are few exceptions to this rule – this is the reality you must face.
Consider Bankruptcy Fast
Don’t delay in consulting with a bankruptcy attorney about your options. Depending on where you live foreclosure may happen quickly. By filing bankruptcy immediately, you can avoid foreclosure and eviction, at least for awhile. The bankruptcy automatic stay will stop all foreclosure proceedings and give you an opportunity to propose a repayment plan if you’re filing Chapter 13 bankruptcy.