How can I stop the creditor calls?
The way to stop creditor calls for a while is to hire an attorney to take the calls. Even if we do a payment plan with you, we stop the creditor calls the minute you hire us.
Once creditors are notified that you are represented by an attorney, they must contact you through your attorney. However, this strategy is limited because while creditors will stop calling, they can sue you and freeze your accounts and garnish your wages.
In Order to permanently stop creditor calls you have two choices:
1) Pay the Creditors Off OR 2) File for Bankruptcy
Filing bankruptcy will stop all collection activity by creditors no matter what the stage of collection. If the debt is dischargeable, the activity will be stopped forever. If the debt is not dischargeable, such as student loans or recent tax debt, or government fines, the collection will only be stopped temporarily.
One good thing about hiring an attorney is that many creditors will refrain from suing you. If they think you are going to file bankruptcy anyway, they might be likely to invest in additional collection activities. This is not guaranteed, but it is a trend we see in our practice. The sooner you get us involved, the less likely it is that you will be sued.
At Waltzer Law Group one of the services we provide is that we handle all creditor calls BEFORE you are paid in full. That way, even if it takes you a little while to pay for your bankruptcy, you can enjoy relief instantly.
Waltzer Law Group can handle your loan modification. However, what is most important is that we will not take your money or waste your time by telling you we can get you results if we can’t. This doesn’t mean that all of our loan modifications get approved, but we will only take Loan Modification clients we think have a chance at success.
Loan Modification is when a bank agrees to alter the repayment terms of your loan (usually a mortgage). This can be done inside or outside of a bankruptcy. Though, in my experience it is easier to get a modification while in a Chapter 13 bankruptcy.
The offers bank present are often deceptive. Sometimes the bank will extend the payment period for 40 years, but usually there is a catch. The modification sets up a 40-year repayment plan. This feels like a great relief. But the fine print and deceptive language hides a terrible twist- 40 years is not how long you really have to repay your loan. The banks just figure out what the payment would be IF your loan were switched to a 40-year loan.
But the loan must be paid by the end-date of your original contract. This is SO important to understand. Why? Because you might only have monthly payments for another 10 or 20 years. Then the full balance of the mortgage is due at once. This is called a “Balloon Payment”.
Consider the example below:
Jane has $350,000 outstanding on her mortgage. The original mortgage was for 30 years and right now she is about 20 years in.
The monthly payment is $2000 per month and she is 15 months behind. So, she has $30,000 in mortgage arrears.
Jane does a loan modification and the bank says “we will modify the loan to a 40-year mortgage, put the arrears back into the mortgage, and reduce her monthly payment to $1600”.
This sounds great at first.
“Wow!” Jane thinks, “I have 40 years to pay this $350,000 mortgage debt and my payment is now $1600 per month”.
But Jane has a careful attorney who notices that the actual repayment period is not changed. She is now 20 years into her 30-year mortgage, and this modification does not extend that payment period.
She still has only 10 years left to pay the full balance of the loan! The $1600 per month number is the amount her monthly mortgage payment would be if the mortgage were spread over 40 months, but the bank is not actually giving her extra months. So, what will happen? After Jane pays $1600 per month for 10 years, she will still owe $200,000 to $300,000 on the mortgage and it will all be due at once.
The banks position is that the borrower will refinance the house before then. But how easy is it to refinance when you have bad credit? And what if the rates are 4% now, but 8% in 10 years? The banks love this arrangement because most people will either end up in foreclosure again or will have to refinance at a higher interest rate. Beware.
There is a lot of discussion about modified mortgage options, but the banks are not our friends. The only time a bank will ever take a financial hit it doesn’t have to take is if the government forces it to do so.
Loan modification is a wonderful tool to help homeowners keep their homes, but it is not without risks.
Below is information from the HUD government website as of 2015 (a few years ago). It is still accurate. Note that a “Mortgagee” is the bank / lender and a “Mortgagor” is the borrower.
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.