If you’re a homeowner struggling to make your debt payments, you should remember several important rules before you engage in a strategic default, submit to foreclosure, or declare bankruptcy.
Rule No. 1: Your home loan may be as much a millstone around your bank’s neck as it is around yours. In recent years, thousands of homeowners have surrendered their homes to the bank or defaulted on their residential mortgage. As a result, the balance sheets of many banks remain clogged with an excessive amount of residential real estate and bad debt. Consequently, many banks are willing to negotiate with their debtors in order to keep the loan and the asset in the debtor’s hands – and off theirs.
Rule No. 2: A home loan is a contract with a financial institution. And as with any deal, the parties can voluntarily change the terms even after they sign the contract. Whether you and your bank agree to a forbearance, a loan modification, a sale, a short sale, or a deed in lieu of foreclosure, these kinds of ameliorative efforts can give you the breathing space you need to avoid a more drastic and permanent decision.
Rule No. 3: An attorney can often help you sort through these and many other challenging financial and legal decisions. Renegotiating your lending agreement carries with it the possibility of altering your legal rights. And many distressed debtors ultimately need a bankruptcy or foreclosure option, despite successfully changing the terms of their loan. As you consider how you should proceed, an attorney can help you understand your choices and help you make the right one.
The attorneys at the Dallas law firm of Fears Nachawati have years of experiencing advising distressed debtors. Whether you need a loan modification, a strategic default, or outright bankruptcy, we can guide you through those important decisions. Talk to our professionals today to learn about your next steps.