More news on mortgage modification trends.
The WSJ reports that borrowers who receive a permanent mortgage modification still have lots of other debt. The median ratio of total debt payments to pretax income stands at 63.5%. This means 20% of borrowers (or more) with permanent modifications are likely to re-default, primarily because of those high debt levels.
If you have significant debt in addition to an un-affordable mortgage, you need a strategic plan; mortgage modification is tactical.
When bankruptcy counseling makes sense
Before going through an exhaustive application process for a mortgage modification, we’d like to recommend a bankruptcy counseling session with a qualified attorney. Yes, even if you want to avoid bankruptcy at all costs.
A bankruptcy counseling session with a straight-talking attorney can result in:
- Asset planning and protection strategies
- An analysis of whether you are at risk of re-defaulting after a mortgage modification
- A referral to agencies that may be able to help you with your financial difficulties
Many people we see in our offices want us to handle negotiations with credit card companies or provide them with credit card counseling. Most often these individuals need bankruptcy protection, not creditor negotiation or credit card counseling. You may be the exception, so contact our office for an initial consultation.
Bankruptcy checklist (not legal advice)
Here’s a checklist to consider before calling our office. If several of these apply in your situation, bankruptcy is a viable consideration:
- Your wages have been garnished or your bank account has been attached
- Most of your debts are unsecured debts like credit card bills, hospital or doctor’s bills, etc.
- Your total debt, not including your car or house loan, is more than you could pay, even over five or more years
- Collection agencies are calling you at home and/or at work
- Your payments are more than 30 days behind on more than one bill
- There are lawsuits pending against you
- You have high medical bills not covered by insurance
- You owe income taxes that you are currently unable to pay
- You have few assets
- You have little or no savings
- You have had property repossessed (such as a vehicle)
Visit our Bankruptcy Resource Center before calling a qualified attorney (Mitchell & Culp or another firm) for a bankruptcy counseling session.