I received a Notice of Default. What does this mean?
This is the first step a lender takes to start the foreclosure process. You still have the opportunity to bring your loan current. In simple terms, it’s the lender’s way of giving you a “wake up call.” If you don’t bring your loan current soon, they may move forward with the foreclosure (auction sale of your property).
I received a Notice of Trustee’s Sale. What does this mean?
This is probably THE MOST IMPORTANT NOTICE because it informs the homeowner of the date and time the property will be sold at auction. If you receive a Notice of Trustee’s Sale, you should immediately contact a qualified attorney to review your options with you. If a lawful foreclosure sale takes place, you will not have the opportunity to reclaim/save the property.
Why would I need an attorney?
A qualified attorney can provide you with legal advice on many levels. For example, a qualified attorney can (1) help protect your rights; (2) help you save your home; (3) help you stay in your home as long as possible; (4) help you avoid tax consequences of foreclosure or short sale; (5) help reorganize your debts, reduce your car payments, reject leases or completely erase your debt; and (6) help completely erase your second mortgage or home equity lines of credit. Experienced attorneys, trained in the area of foreclosure and bankruptcy can be very helpful in planning a better financial future for you and your family.
How do I select a qualified attorney?
First and foremost, ASK QUESTIONS! Unfortunately, the unemployment rate has significantly increased, as well as the number of foreclosures. Due to these increases, the number of bankruptcy filings has jumped nearly 35% just this year. This means that a lot of inexperienced attorneys are “jumping into” the area of bankruptcy, just to make a buck. You need to seek the advise of an experienced attorney, so don’t be afraid to ask questions. Interview your attorney and check references. I recommend the following questions:
- How many bankruptcy cases have you actually filed? — Select an attorney who has filed at least 1,000 cases.
- How long have you been actively practicing in the area of bankruptcy? The laws have changed, make sure they have been actively practicing bankruptcy for at least 6 years. Preferably, you want an attorney who has experience prior to the 2005 Bankruptcy Reform Act and after. You do not want an attorney who “dabbles” in the area of bankruptcy. It is very serious Federal matter.
- Does the attorney handle both Chapter 7 and Chapter 13 cases? Many attorneys do not handle Chapter 13 cases because they are more complicated and they do not have the experience to handle them. If the attorney does not handle Chapter 13 cases, this can be a good indication that he or she is not very experienced in the area of bankruptcy.
- Is the attorney a member of NACBA (the National Association of Consumer Bankruptcy Attorneys) and if so, does he or she actually attend the seminars/conferences offered every 6 months? You can verify membership at www.nacba.org. NACBA is a national leader in educating attorneys in bankruptcy and advocating for your rights. However, it is not enough that your attorney just be a member, make sure they actually attend the seminars.
- Is the attorney a member in good standing with the State Bar of California? Make sure the attorney you hire has not been suspended or disbarred. You want an attorney in good standing and one with a clean disciplinary record.
- TIP: Try to avoid attorneys who are willing to quote a fee on the phone. The attorney has never met you, has not reviewed the details of your case and has not discussed a plan of action with you. How can he or she HONESTLY give you a fee quote? Beware of this tactic. Many will give you a low-ball price just to get you in the office. Then, they bill you and bill you and bill you. Soon, you have paid more than you ever should have for your case.
My neighbor’s house was in foreclosure. He filed for bankruptcy and said he gets to keep his house/cars and does not have to pay his $90,000 second mortgage. How is that possible?
By working with an experienced bankruptcy attorney, many homeowners are able to save their homes from foreclosure. The arrears (i.e. past due payments) can be put into a repayment plan at 0% interest over a 60 month period, allowing the homeowner to bring the mortgage current over time. Additionally, a second mortgage or line of credit lien can be stripped off or erased in a Chapter 13 bankruptcy if that loan is unsecured, meaning the house value is less than what is owed on the first mortgage. This can be a huge savings and can help put the homeowner in a much better position to start rebuilding equity.
Should I use my 401k to pay off my credit cards?
No! No! No! At the very least, discuss this with a qualified attorney and tax professional before you make any decisions to do so. Your 401k is completely protected in bankruptcy. If your debt situation is significant enough to consider wiping out any portion of your retirement, then STOP and get help. You may be able to completely erase your debt, lower your car payments, and KEEP ALL OF YOUR RETIREMENT!