I HAVE BEEN OUT OF WORK FOR 2 MONTHS AND AM FALLING BEHIND ON MY DEBT. SHOULD I TRY TO GET THE MORTGAGE FORBEARANCE?
Many people do not know where to turn as a result of the coronavirus. Some Americans are getting stimulus checks and unemployment compensation, while others have not received anything at all.
Also, some businesses have received the payroll protection loans, while some small businesses are still locked out or are getting no business and have not received a dime.
Also, under the CARES act, federally backed mortgage companies are prevented from foreclosure for 60 days from the date of the legislation, which was March 27, 2020, and you can apply for forbearance on your mortgage for 180 days and then if the lender approves it, another 180 days.
Forbearance Is Not Forgiveness
However, if you are just struggling with all your bills, how great is the mortgage forbearance program and should you apply?
As I have always advised my clients, always pay the mortgage before any other debt. Never rely on the idea that you will be able to get a loan modification down the line or that the mortgage forbearance will give you a breathing spell for six months to up to one year.
People do not realize that Congress is giving Americans a forbearance—not forgiving the loan. Also, you must resume the regular mortgage payment six months after the agreement if you got a six-month forbearance. Thus, if you get a forbearance from May to October, then starting November, you must make your regular mortgage payments, plus you have to cure the delinquency created by the forbearance.
For most people, they would apply for a loan modification, work out a repayment plan with the mortgage company, or file a chapter 13 bankruptcy to cure the arrears over five years.
Always Pay Secured Debt First
If you have to pick and choose, always pay the mortgage and other secured debts such as mortgage and auto payments before paying back credit cards or medical bills. The unsecured debt can always be discharged in a bankruptcy and at TAIEBLAW, we will advise you what bankruptcy is the best option so that you do not lose your home.
A Mortgage Forbearance Should Be Your Last Resort
Because of this crisis, my advice is to only take a mortgage forbearance if you have no other alternative. However, if you have enough income to stay current with your mortgage, give the mortgage priority. If your debt is stressing you out and overwhelming you, we can help you get a fresh start by filing bankruptcy.
For more information, go to TaiebLaw.com or call us at (856) 235-4994.
PLEASE NOTE: WE ARE OPEN FOR BUSINESS TO HELP ANYBODY WHO IS IN FINANCIAL DISTRESS.
Steven N. Taieb, Esquire has been a south jersey bankruptcy attorney for 35 years and is board certified in consumer bankruptcy law by the American Board of Certification which is accredited by the American Bar Association. We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy Code.