The biggest mistake people make is trying to do a loan modification when they are in foreclosure.

A couple recently came to TAIEBLAW for help and said that they hired an attorney in California who was working on a loan modification when the people’s home went to sheriff sale.

How to Prevent Foreclosure

I have no problem with people trying to do a loan modification; however, once a Chapter 13 is filed, it creates a stay and gives a person time to work on a loan modification with the bankruptcy stay in effect. This prevents foreclosure while one can seek a loan modification without the foreclosure continuing.

If you rely on the mortgage company or an out-of-state lawyer who is not familiar with the process or court rules in New Jersey, you can really get burned.

How a Chapter 13 Can Help

The best advice when you are behind on your mortgage is to file a Chapter 13, since if you keep on trying to get the money to reinstate the case, the mortgage company will add additional fees and costs for legal fees. When people delay, they will get deeper in debt and find themselves a lot further behind than when they file Chapter 13.

Thus, even though a Chapter 13 adversely affects your credit, the missed mortgage payments won’t help your credit either. Thus, don’t delay where you are forced to file a loan modification plan. A much more secure plan to save your home is filing an arrearage cure.

If you have any questions concerning any type of bankruptcy filing, please contact TAIEBLAW at 856-235-4994 or visit our website TAIEBLAW.COM.

Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 35 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.