As a bankruptcy lawyer in Walnut Creek I talk to clients every day about the legal possibilities and limitations a bankruptcy filing has for people in financial distress. The number one reason why the majority of my clients is faces with bankruptcy is that their mortgage payments became unaffordable.
Mortgages adjusting upwards
Many of my clients had so-called teaser rates which helped them purchase their home. Over the last few years these so-called sub-prime mortgages have adjusted upwards in a way that was often unpredictable and came as a surprise to many of my clients.
Often the initial interest rates started at 4% and went up through several hikes to 9% and higher. Banks often inflexible in negotiating lower interest rates force people to consider legal avenues to get out of the mortgage trap.
"Lien Stripping" the Second Mortgage
Fortunately there is a legal tool called "Lien Stripping".
In a Chapter 13 Bankruptcy the bankruptcy judge can remove the second mortgage thus lowering the overall debt burden dramatically. There are fairly complicated rules that have to be followed and not every second mortgage can be removed. It makes sense for someone wanting to get rid of his/her second mortgage to consult with a bankruptcy lawyer to find out if the bankruptcy rules allow him/her to remove the second mortgage.
Contra Costa faces tough times in Foreclosure
As a practicing foreclosure lawyer in the East Bay I experience the worsening foreclosure crisis moving west from Sacramento on a daily basis. Some clients can be helped without using bankruptcy by negotiating with the client's mortgage lenders to lower the interest rate and principal amount of the loan.
Being a bankruptcy lawyer helps in my negotiations with lenders. Lenders know that if they do not negotiate their client is represented by an attorney who can use bankruptcy as a means to cut off the lender from any claims against the borrower. This possibility alone is often enough to get the lender to negotiate and offer a mortgage that is affordable to the client.
For a detailed description of foreclosure prevention and bankruptcy tools check out our website at www.rinnelaw.com
