Three Bankruptcy Alternatives: How to Avoid Filing for Bankruptcy in Michigan

If your financial circumstances this year have been adverse to you and your family, here is an article that can guide you through several alternatives to bankruptcy.

If you want to discuss your case details contact info for Babi Legal Group is on this website. With our contact information choose attorneys that are on your side no matter what.

Thinking about bankruptcy alternatives?

Before filing for bankruptcy, take a good read at these three alternatives to bankruptcy we offer and other sound advice, from debt consolidation loans, finding a good financial advisor, doing a repayment plan, and having excellent debt management.

In the United State of AmericaIndividuals are not incarcerated for failing to pay bills, meaning there are no debtor prisons,(for example, not being able to pay settling your mortgage is not a crime). Filing for bankruptcy or having a negative credit score is not the end of the world. Read on for more advice.

Alternative #1 – Debt consolidation plans

If you are thinking about settling debts before you go to bankruptcy court let the Babi Legal Group help you to avoid court judgment.

A debt consolidation strategy is an excellent option for individuals who are struggling with unmanageable bills. 

Debt consolidation combines all of your creditors into one payment every month. To pay off all of your debts, you’ll need to take out one loan and use it to repay them all.

As one of the best bankruptcy alternatives, this is a process through which you combine several debts into one. The objective of debt consolidation is to obtain a lower rate on your existing loan than you currently have with your creditors.

You may frequently lower your monthly payment by lowering your interest rate. This should assist you in repaying the debt in full while having little influence on your credit history and rating.

How can I have one of these plans?

To know if this kind of debt relief is at hand for you (or if you have excessive debt or an unsecured debt), contact a bankruptcy attorney at Babi Legal Group. We are here to help you pay debts and get you back to a healthy personal financial situation.

A debt consolidation loan is a method for some consumers to get rid of the hassle of paying numerous creditors by taking out a loan that combines all of their obligations. This can be part of your debt management plan.

Alternative #2 – Loan Modification

If your financial issue is primarily due to the inability to pay your mortgage, then at Babi Legal Group we can help you save your home through a loan modification without having to file a bankruptcy petition. 

Some of the benefits a loan modification can achieve for a homeowner include the lowering of your interest rate, the reduction of your ongoing, monthly mortgage payment, the deferment or forgiveness of missed mortgage payments resulting in the cancellation of a foreclosure sale and even a reduction in the total balance owed on your mortgage!

 

You may qualify for a loan modification if you have experienced a financial hardship such as a loss of income, divorce or medical issues, for example. Most lenders can and want to work with homeowners, even if they have poor credit and have a foreclosure date scheduled since they do not want your home. Even if your home is not in foreclosure yet or you are current with your mortgage payments, a loan modification is an option that all homeowners should explore. It is, however, often difficult to determine what kinds of options are available to you, whether you will qualify for a loan modification and whether there is a good chance of successfully obtaining a loan modification.

Alternative # 3 – Do a debt settlement

There are several ways to avoid bankruptcy. Debt settlement or debt negotiation is a very good alternative to bankruptcy. When you have a few significant bills, debt negotiation and settlement are frequently used. 

With the Babi Legal Group on your side, we will be able to contact the creditor or the creditor’s attorney to negotiate a lump-sum payment or a discounted payment plan of your debt that you are delinquent or behind on. 

The objective is to get a settlement for as little money as possible. Babi Legal Group attorneys have created several unique strategies to obtain the finest bargain feasible.

One of the most essential aspects of a debt settlement is having adequate cash on hand.

Creditors typically demand a lump sum payment within 30 days of a debt agreement being reached. As a result, it’s critical to be able to access the money before settling your bill.

In this way, your personal financial situation might be reestablished soon, and you will be able to save money as well. You will still have financial obligations. Call our office today so our attorneys evaluate your case.

Careful with scams on your credit record

Debt settlement, or debt negotiation, is a method of negotiating your debt that allows you to pay a reduced amount as full payment. However, there are several issues linked with debt settlement programs, including fraud and credit score harm.

Several firms that provide debt settlements are frauds. The FTC’s website offers details about the issues linked to debt settlement programs.

Bankruptcy attorneys in Babi Legal Group are strictly regulated by the State of Michigan, unlike debt settlement businesses, where there are no rules. Make sure your debt management program is handled by the correct person.

Expanding the Receivership Act in Michigan

A recent change was made in Michigan, which broadens the scope of receivership procedures, a liquidation alternative to bankruptcy. Previously, the receivership statute in Michigan only applied to commercial real estate receiverships.

The Department of Treasury and the Office of Financial Management have provided a solution that covers all operating companies in Michigan, as well as commercial and industrial loans without regard to real estate collateral.

More creditors will have the option of requesting the appointment of a receiver under the Receivership Act. The UCRERA was previously confined to foreclosures and the enforcement of a mortgage on commercial real estate, although it has been expanded in recent years.

The new law changes the term “mortgage” to “security agreement or lien,” which vastly expands a creditor’s power to seek and a court’s authority to appoint, a receiver. More creditors will be able to request the appointment of a receiver under the Receivership Act, which went into effect in July 2021.

In conclusion, the amendment broadens the definition of “receiver” under the Receivership Act in Michigan to include non-commercial real estate circumstances and provides for a more organized procedure for receiver appointment.

Your debt management plan

Even before you think of bankruptcy, every time you ask for a loan, borrow money or pay taxes, you should have a personal backup savings plan. You can begin by putting away only a small fraction of your total monthly income.

Here are some tips that can help:

  • Find out about all interest rates before asking for a loan
  • Look for a nonprofit credit counseling agency that can be your companion when asking for credit lines
  • Never lend money
  • Always look at your remaining debt when you are paying a loan so you see the money is being discounted
  • Find ways to have a better credit score
  • Try to buy a used car instead of opening any car loans
  • Try a free evaluation that you find in any attorney listings to see how many secured and unsecured debts you have
  • Transfer debt to credit cards that offer the lowest interest rate
  •  If you have equity in your house, you can use a home equity loan to pay unsecured creditors

How important is your credit report?

The term “bankruptcy” has a negative connotation, and it is not always used to describe individuals who are legally unable to pay their debts. For those who do choose to declare bankruptcy, it can have devastating effects on both their mental health and credit history.

The major advantage of enrolling in a debt management program is that it will not damage your credit rating further. The seven-year reporting period (which is up to ten years) for negative items in your credit report linked with past obligations applies to all bankruptcy filings.

Bankruptcy will not appear on your credit reports, however, it will be noted in the report that you joined a debt management program. You will of course need some credit counseling as well.

Advantages of not having to file bankruptcy with legal advice by your side

Not everyone who is bankrupt has to proceed with a bankruptcy filing. There are public assistance benefits many people do not know of, as well as debt loans and debt management plans that can save a family.

Looking for a bankruptcy alternative in a confidential attorney-client relationship can bring you numerous benefits in this legal process. An attorney can also be a credit counselor that is extremely careful with sensitive or confidential information like how much money you owe.

What does the bankruptcy trustee investigate?

There are a lot of reasons why people file for bankruptcy, but they all have one thing in common: they want to get rid of their debt. To do that, the trustee will need to investigate your life and finances from top to bottom. The goal is not just to figure out if you’re eligible for bankruptcy relief, but also what caused you so much financial distress in the first place.

What is a bankruptcy process?

A person or firm that is unable to repay its outstanding liabilities goes through the bankruptcy procedure.  The bankruptcy process is made up of various steps. The first step in the procedure is filing, which can be done by either an individual or a business that owes money to its creditors and cannot repay it.

Who can file for bankruptcy?

The debtor who is either an individual or a business files a voluntary bankruptcy petition which will notify everyone on the debtor list in the bankruptcy to notify them of the filing, this, is the most frequent type of filing. The creditors can also file a bankruptcy petition on behalf of the debtor, which is known as an involuntary bankruptcy, though this is less common. The assets of the debtor, including real estate, are all weighed and assessed. They might be used to repay a part of the outstanding debt or even the total debt.

Advantages and disadvantages of filing bankruptcy

Depending on which sort of petition you submit, declaring bankruptcy can help you avoid having to repay your debts and preserve your house, vehicle, business, or other potential assets. However, declaring bankruptcy will negatively impact your credit, and lowering your credit score might make it hard to obtain car loans, house mortgages, or even a credit card.

What does the bankruptcy trustee investigate?

Whenever you file for bankruptcy, you will have a trustee assigned to your case. The bankruptcy trustee thoroughly examines your bankruptcy petition and supporting documents such as tax returns, pay stubs, property deeds, mortgages, and bank statements to look for hidden assets, avoidable transactions, and other irregularities before you are allowed your final discharge. This means that the bankruptcy trustee needs access to all your financial records, bank account information, monthly payments, total monthly income, and any other financial documents dating back to 6 months and in some cases 2 years.

Will a bankruptcy trustee always look for bankruptcy fraud?

The trustee will ask everything about your financial situation. If the bankruptcy trustee suspects fraud, he or she will take action if it appears that a fraudulent act might deprive creditors of the money they are owed. If necessary, it is the trustee’s job to also refer the case to the United States Trustee, which is a part of the department of justice while looking at your financial situation.

If a United States Trustee suspects fraud, it can bring federal criminal charges against the debtor seeking penalties and jail time.

What does the bankruptcy trustee investigate in a Chapter 7 bankruptcy?

The 341 meeting of creditors is required for everyone who files for Chapter 7 bankruptcy, whether it’s an individual or a business. The bankruptcy trustee—the individual in charge of your case—will verify your identity and ask you about your bankruptcy filing under oath at the hearing. Sometimes in Chapter 7 bankruptcy, the trustee may sell any nonexempt property for the benefit of the creditors, however, the debtor in most cases has the right to convert the case to Chapter 13 to avoid the assets from being sold.

What does the bankruptcy trustee investigate in Chapter 13?

If you file a Chapter 13, the trustee is required to do many of the same things a chapter 7 trustee would do, but the chapter 13 trustee does not sell your property.  Instead, the chapter 13 trustee will require you to repay your creditors through your chapter 13 repayment plan the same amount that the creditors would have received if your property was sold by the chapter 7 trustee. . The trustee also collects all the chapter 13 plan payments and sends money to creditors each month as provided for in the chapter 13 plan. While looking into your financial affairs and bank accounts, the trustee examines whether you could—or should—pay more to creditors than what you’ve said in the Chapter 13 plan.

Do I need a bankruptcy attorney to face the bankruptcy trustee?

Beginning an attorney-client relationship is very important when filing for bankruptcy. In this confidential relationship, attorneys evaluate your bank statements, tax returns, and any other document of the estimated value for your real and personal property to accurately evaluate your case. They help you fill in your bankruptcy forms with case details, contact info, as well as helping you get together all your bankruptcy documents.

A bankruptcy lawyer will give you sound legal advice. You will have their law firm behind you to help you with anything the trustee asks. Yes, having professional help can help you avoid losing your assets to a trustee sale as well as provide sufficient evidence which a trustee will accept to evaluate your case.

Your bank account and the bankruptcy trustee

The bankruptcy trustee will examine your bank account. The trustees are beginning to delve into bank records more thoroughly. They discover hints of belongings that debtors may have sold or money that vanished without a trace.

The trustee will want to see at least 3 months of bank statements from the month you filed the case. The more months, the better.

Your trustee can request bank statements from you for all of the years in question. Bank statements can also be used to verify your income and expenses as stated to file bankruptcy.

Going to bankruptcy court

Federal courts handle all bankruptcy cases according to the United States Bankruptcy Code’s regulations. There are several types of bankruptcies, which are identified by their chapter in the U.S. Code.

Because bankruptcy has long-term financial and legal repercussions, it is highly advised to seek the assistance of a competent attorney. Filing pro se is the term used to describe people who file bankruptcy without the aid of an attorney. 

How to find the best attorney listings?

The resources below can assist you in locating a bankruptcy lawyer if necessary. If you don’t have the cash to pay for an attorney, you may be eligible for free legal services. Many lawyers offer a free evaluation of your case, especially if it is a Chapter 7 bankruptcy.

  1. LSC – The Legal Services Corporation (LSC) is a private, non-profit organization that advances equal access to justice by offering financial assistance to more than 100 independent nonprofit legal aid organizations in each state, the District of Columbia, and U.S. Territories.
  2. American Bar Association – The mission of the American Bar Association’s Legal Services Division is to assist and expand access to justice for all people by providing legal assistance, counsel, and representation in the country’s civil, criminal, and military justice systems.

If you use Google, beware of any attorney advertising miracle legal advice. More than one bankruptcy attorney will do some paid attorney advertising to be at the top of website searches through automated technology.

There are also several websites where it will be considered a paid attorney advertising to access information about attorneys. In other states, a website’s content may be classified as a lawyer referral service.

If you are looking for professional help to fill bankruptcy forms, avoid lawyer referral services and third parties with any other automated technology. Look for direct contact information. Choose attorneys that have a recognizable law firm that can give you personal attorney-client attention. Sometimes a Google zip code search for lawyers gives the best result.

 341 Meeting of Creditors

In any of these cases, the meeting of creditors is a hearing for all debtors. It’s also known as a 341 meeting since it’s required by Section 341 of the Bankruptcy Code. Because they are not obligated to attend, creditors do not waive their rights if they do not attend these meetings. Your attorney can help you with the filing date and any supplemental terms you will need to necessarily secure your bankruptcy discharge.

Learn more about bankruptcy trustees

Bankruptcy is a legal process that allows debtors to get a fresh financial start while still protecting their property and assets. Babi Legal Group’s bankruptcy attorneys have several years of experience advising people on how to successfully navigate the bankruptcy process by addressing all of their concerns, from A to Z to successfully obtain your bankruptcy discharge.

Trustee Duties

A bankruptcy trustee is appointed by the court for all Chapter 7 and Chapter 13 cases. They are responsible for reviewing the petition as well as the supporting documents, examining the person who filed the claim, and selling any property for creditors’ benefits.

There’s a lot that the bankruptcy trustee does throughout the process, serving as the point of contact for the applicant. When you file for bankruptcy, your possessions will technically not be yours anymore. They will be managed through a bankruptcy estate while the case is still open.

The trustee’s primary duty is to locate all an applicant’s assets and then sell them to pay off credits. This involves reviewing all assets that are listed as exempt in the bankruptcy filing itself. Any assets that are not exempt will be sold by the trustee, with the proceeds then sent to creditors. 

One tool that bank trustees use is called the Rule 2004 examination. Through this process, the bank trustee will obtain evidence they need in the case. Through the process, the trustee can assess the extent and nature of a debtor’s assets and estate, while also examining all transactions to determine if there is any fraud.

The applicant will also work closely with the bank trustee, providing them information, proof of assets, income, debts and more. This means that the primary duty of the applicant is actually to accommodate any reasonable requests that the trustee has of you.

Fraud Detection

One of the main duties of a bank trustee is to identify whether any fraud has occurred. These trustees are trained at reviewing and finding things that may be hidden in mounds of paperwork.

This could include assets that may be hidden but found through payroll deposits, tax returns, bank records, debts and/or public records. They also might investigate reports on assets provided by business partners, coworkers, friends, former spouses and more. 

The trustee is looking for any property, income or other asset that an applicant hasn’t disclosed or has undervalued. They’ll then use all tools at their disposal through the Rule 2004 examination to uncover anything unusual in documentation.

If a bank trustee suspects fraud, they can hire an attorney to file a lawsuit against you. This is done to recover the assets that you are hiding so they can pay your creditors. If you’ve worked with someone else to hide your assets, the lawsuit can be filed against them as well.

It’s also possible that if fraud is detected, less extensive (and serious) measures may be pursued, such as the simple discharge of your case by the bankruptcy court.

How to file bankruptcy yourself in Michigan (and why you shouldn’t do it yourself)

  • Get your finances back on track 
  • Rebuild credit and get a fresh start 
  • Rest easy knowing that you’re doing what’s best for your family

If you are in bankruptcy and need to know how to file bankruptcy yourself in Michigan, we can help. We will tell you why filing bankruptcy yourself is a bad idea and what the consequences of doing so could be for you. It doesn’t matter if it is Chapter 7 bankruptcy or Chapter 13 bankruptcy. We’ll also give you some tips that might make bankruptcy much easier on your part. Let’s get started!

Filing bankruptcy in Michigan

The process of bankruptcy and bankruptcy law can seem complicated and daunting, but with the right support, it isn’t as hard to understand. Filing your petition in Michigan for any type of financial emergency will require meeting up with bankruptcy lawyers who are experienced in either chapter 7 bankruptcy or chapter 13 bankruptcy to determine what is best suited towards resolving your situation before starting this journey which has lasting effects long after proceedings have finished!

Does it work when people file themselves for bankruptcy?

The answer is usually it doesn’t. A person, partnership, or company’s debts becoming so huge that they do not believe they will be able to pay them may file for bankruptcy. Bankruptcy is a legal procedure in the United States Courts in which a judge and trustee look at the assets and liabilities of people, partnerships, and businesses that cannot pay their bills.

Filing for Chapter 7 or Chapter 13 bankruptcy requires thorough study and understanding of legal issues. You might lose your rights due to a lack of knowledge or errors during the process. Official bankruptcy forms can be difficult to understand. The federal law prohibits bankruptcy court employees and judges from giving legal counsel for a bankruptcy case. This is why it is better to work with a qualified attorney.

Steps to file bankruptcy for yourself

 

The basic principle is that the easier your bankruptcy, the better your chances are of finishing it on your own and obtaining a bankruptcy discharge, (i.e., the order erasing your debt) which is considered by most to be the most difficult aspect of bankruptcy.

The first thing you should do is collect all of your financial papers to better understand your current financial status. Every person who files for bankruptcy must take a credit counseling course in the six months leading up to their bankruptcy filing.

Forms must be completed and submitted to the court, which may take time away from your situation. The forms are lengthy, with at least 23 separate documents plus 70 pages in total. A Chapter 7 bankruptcy filing fee of $338 is required by the federal court. When a bankruptcy petition is filed with the court, this amount is usually due.

After you’ve completed your bankruptcy forms, you’ll need to print them out for court. The 341 meetings, or creditors’ meetings, will take place about a month after your bankruptcy case is filed.

What does a bankruptcy attorney do?

 

During a bankruptcy process, having a bankruptcy lawyer by your side and covering the attorney fees pays off. Your lawyer is there to help you with the legal aspects of your case. They will advise whether or not filing bankruptcy makes sense and how it can affect your property as you may be at risk of losing the property to the chapter 7 trustee who is required to sell it to help you pay your creditors.

They know the federal bankruptcy code, so they can give you education on what happens during each stage of the procedure. They are fully prepared when their client with an overwhelming debt needs them most!

File for bankruptcy with a professional legal advice

 

Your lawyer’s job isn’t just helping one person get out from under debt; rather it’s advocating in every aspect involved, from debt management to credit counseling courses to bankruptcy proceedings.

If you owe money and are looking for some debt relief, whether it is a credit card debt or from delinquent loans, the best way to face a bankruptcy judge and bankruptcy laws is with a qualified attorney by your side. Beware of free legal services that usually end up not being so.

Bankruptcy lawyer and bankruptcy filing in Michigan

You’ll need to gather all of the paperwork you’ll need to file your Chapter 7 bankruptcy in Michigan. Keep in mind that you’ll need papers to complete the forms as well as documents that you’ll be required to submit to the trustee before your 341 meeting of creditors’ hearing.

The most essential things you’ll need to file your Chapter 7 bankruptcy in Michigan are income information, including pay stubs and prior years’ tax returns. You also need to have all past and present bills. A lawyer will come in extremely useful at this point.

A bankruptcy attorney will assist you in documenting the names and addresses of everyone to whom you owe money. If you’re unsure about who all of your creditors are or how much you owe, a Michigan attorney may be able to help. He understands the local rules and can help you with all financial documentation and credit reports required.

How can I go to a bankruptcy court with no money?

In bankruptcy, the financial eligibility requirements are often a matter of interpretation. In some cases, bankruptcy courts say that you can’t file bankruptcy if your income is too high. If you have property or assets, this may make it difficult to qualify for Chapter 7 bankruptcy without losing those assets in the bankruptcy case.

Secured debts are different from unsecured debts, which both can be eliminated in bankruptcy. A bankruptcy attorney can help you with the bankruptcy proceedings, but your eligibility may depend on your state’s laws. 

How bad is filing for bankruptcy in Michigan?

Bankruptcy in Michigan is a nightmare for many people who try it on their own. It’s not necessary to file bankruptcy yourself when you can hire an attorney that knows all about personal bankruptcy and have all of the required forms completed by someone who knows how everything works!

The bankruptcy process requires time, patience, and attention to detail on your part. There are legal documents that need to be filed with the bankruptcy court and the trustee.

Different bankruptcy lawyers in Michigan will have different ways of handling your bankruptcy filing. The process can be streamlined with a lawyer’s help, and many people who try to file bankruptcy themselves end up making costly mistakes that could ruin their chances for debt relief.

Bankruptcy costs money, so it makes sense to hire an experienced bankruptcy lawyer to help you. Depending on your financial situation, bankruptcy attorney’s fees are paid out of the money they save you on unnecessary bankruptcy costs.

The best way is by asking for referrals from your friends and family members who have filed for bankruptcy in Michigan or other parts of the country. Ask each person you speak with to provide you with the bankruptcy attorney’s name, phone number, and office address.

Filing bankruptcy when you have real estate

If you have real estate, filing for bankruptcy will have different consequences depending on the bankruptcy chapter you choose. When filing bankruptcy under Chapter 7, your real estate property or home may be exempted from liquidation if it meets certain requirements. However, there are some cases where the trustee has no choice but to sell this kind of asset to distribute funds among creditors.

Under Chapter 7, if you have real estate, it may be included in a bankruptcy liquidation. However, if you have a home or real estate which is your primary residence, it could be exempted. You might choose to file for Chapter 13 bankruptcy if you need time to repay your mortgage arrears, stop a foreclosure or stop a repossession of your vehicle while restructuring the vehicle loan in the chapter 13 bankruptcy plan that can last anywhere from 3 to 5 years.

What affects bankruptcy and debt relief?

Many circumstances can affect what type of bankruptcy you qualify for or what may be best for you.  At Babi Legal Group, our experienced attorneys can help decipher the details to put you in the best position after filing for bankruptcy.  For instance, married couples can file for bankruptcy together or one spouse can file all on their own.  It is important to understand how these types of different scenarios can affect your case and what could be expected of your non-filing spouse.

What is a bankruptcy petition?

A bankruptcy petition is the bankruptcy paperwork that is required to be submitted to the court detailing your financial situation as well as your assets and liabilities.  The Court, trustee’s and creditors alike rely upon the petition to tell your financial story as to why you are eligible and seeking to file bankruptcy.  The petition is something that should be carefully prepared and reviewed before filing.  A well-prepared petition makes all the difference between a smooth case and a terrible bankruptcy experience.

foreclosure

Loan modifications and foreclosures

Everyone experiences hard times now and again. Sometimes, tough economic times can result in scary outcomes, such as the threat of your home being taken away.

If you’ve fallen behind on your mortgage payments, your mortgage company can initiate a foreclosure to take back their asset. If you don’t act quickly to prevent foreclosure with a loan modification, you could soon find yourself without a place to live.

Babi Legal Group has more than 10 years of experience helping people stop foreclosures and negotiate loan modification agreements. They have years of experience working with banks and know the ins and outs of home loan modification laws.

What is a mortgage loan modification?

Banks are not in the business of owning homes. At the same time, they obviously don’t allow their borrowers to live in homes without paying for it.

That’s why loan modification programs were created — to allow the homeowner to make up for missed payments and prevent the bank from foreclosing on the home.

A mortgage loan modification is an agreement between the mortgage company and the borrower that results in a restructured loan that makes it more affordable for the borrower to pay. Depending upon your situation, there are a number of ways a foreclosure modification can be done.

Lenders know that people can experience temporary financial hardship due to a divorce, Covid-19, medical issues, or a loss of income, for example. Most lenders will be amenable to devising loans to stop foreclosure because, as mentioned, they ultimately don’t want your home back.

Can you be denied a loan modification?

While lenders are often amenable to helping their borrowers, there are no loan modification laws that require them to do so. Just because you apply for a loan modification doesn’t mean you will automatically be approved.

Your lender may deny your application for a modification for any number of reasons, including but not limited to their determination of your ability to re-pay the modified loan, providing incorrect information or not providing required documentation in a timely manner.

Do you need a loan modification lawyer?

There is nothing in the loan modification rules and regulations that say you need to hire a lawyer to help with your application. However, having a loan modification lawyer on your team can certainly increase your chances of being approved.

For example, an attorney experienced in a foreclosure loan modification would be able to advise you to start the process of applying at least 30 days prior to the foreclosure sale date. That’s because a lender can still go through with a foreclosure during the loan modification process, even if the modification is pending and not finalized.

The team at Babi Legal Group has the experience necessary to guide you through a loan modification prior to foreclosure and even have successfully obtained loan modification after the homeowner has been denied. Dealing with a loan modification process can be complicated and time-consuming, making it difficult for people to do it on their own without the guidance of experienced professionals.

Loss modification after foreclosure

If you don’t act quickly enough, and in the right fashion, you could end up foreclosed on by your lender. If your situation gets to this point, your options are generally pretty limited — at least when dealing with the lender directly.

Once your home has been foreclosed on, a loan modification is no longer a viable option. In this scenario, we can help you challenge the validity of the foreclosure through the court system, something we have successfully done in the past for our clients.

This may allow you to prevent the foreclosure from becoming official and allowing you to keep your home.

Can a loan modification stop a foreclosure?

One of the most common questions borrowers ask is, “does loan modification stop foreclosure?” The answer is maybe.

It depends a lot on your specific situation, the lender you’re dealing with, and the timeliness of your efforts. In the experience of the attorneys at Babi Legal Group, most lenders will be willing to postpone a foreclosure sale if a loan modification is under review for a final determination.

The challenge is that most modifications can take anywhere from 30 to 120 days to complete. It may take a full month just to get to the review stage of the process. That’s why it’s essential that you start the process of loan modification as soon as you possibly can.

Loan modification programs

Each private lender will have different options for loan modification programs. If you find yourself in need of help to avoid foreclosure, you can reach out directly to your lender to see how they’re willing to work with you.  However, they have no obligation to approve you for a loan modification and will only advise you of the documentation you need to provide.

The federal government offers a number of different loan modification programs for borrowers who have a mortgage backed by the FHA, USDA or VA, for instance. Check with the federal agency that backs your loan to see what steps you’d need to take.

The state you live in also may offer specific programs to help you avoid foreclosure. Michigan, for instance, offers an interest-free loan through the Step Forward Michigan Program. Although this is not a loan modification, it’s another avenue of assistance that may help homeowners stay in their homes if they have experienced financial hardship.

The Michigan State Housing Development Authority also offers a number of resources and guides to homeowners in the state.

What do you need to get a mortgage loan modification?

Just like when you apply for a mortgage to purchase a home, your lender will want to analyze your financial situation to decide whether to approve you for a loan modification. Most lenders will want to verify that you can afford the modified payment, and will ask to see pay stubs or proof of your recent income, as well as copies of your tax return for the last two years.

For independent contractors who receive income through 1099s or small business owners, this can prove to be challenging. The experienced and professional attorneys at Babi Legal Group can help guide you through this process, no matter how complicated your financial picture may be.

Loan modification rules

The rules and regulations that will apply to your loan modification will depend on the specific program that you are hoping to get. For example, the FHA requires that borrowers must have adequate debt-to-income ratios as well as no other options loss mitigation programs at their disposal to qualify for the FHA-HAMP program. Borrowers must also go through a trial payment plan successfully before they are allowed to become full participants in the program.

For private loan modification programs, lenders will generally require borrowers to prove that they can’t afford their current mortgage payments and that they can afford to pay whatever the modified payments will be. The property usually has to be your primary residence.

Conclusion

Falling behind on your mortgage payments can be a scary situation. But it doesn’t have to be the end of your days in your home.

In most cases, and with most lenders, you can get a loan modification to avoid foreclosure. The process can be long, drawn-out and complicated, though, which is why it’s in your best interest to hire an experienced attorney like the ones at Babi Legal Group to guide you through the process.