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Loan modification may not solve mortgage problems

Waking up in the morning to the fear that something bad is going to happen can begin to wear on a person. Will the bank call again today? Will another notice arrive in the mail about the defaulted mortgage? What options are left when there simply is not enough money coming in to pay all the bills? Some may consider contacting the bank to discuss a loan modification, but this course of action is not always successful.

If a Florida mortgage lender denies an applicant's request for a loan modification, where can the homeowner turn? It is possible that keeping the home is no longer the most important goal, especially if the homeowner has no family. However, losing a home to foreclosure is not an option for many families, and when a bank refuses to negotiate, a homeowner may seek relief in other ways.

After speaking with an attorney, the homeowner may conclude that bankruptcy is the best alternative. By filing for bankruptcy, one can put an end to harassing calls and demonstrate to the lender that the financial situation is dire. If saving the home is the priority, a filer will likely consider Chapter 13 debt relief, which typically allows one to keep a primary home and car. Chapter 7, while having the benefit of discharging most debts, may also require the liquidation of most assets. This may include the home.

Only the Florida homeowner -- not the mortgage lender -- can decide what is best for one's family. Bankruptcy and foreclosure both result in some unavoidable damage to one's credit report, but with every positive financial decision, that credit report can improve almost immediately after a bankruptcy filing. Before considering a loan modification, speaking with an attorney can provide a homeowner with sound advice for making a decision that best suits his or her circumstances.

Source: smartasset.com, "Will Bankruptcy Keep Your Home Off the Auction Block?", Dan Rafter, Accessed on July 24, 2017

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