If you are facing foreclosure, you may want to try getting a loan modification in chapter 13 bankruptcy in order to lower your mortgage payments. Our bankruptcy court in the San Francisco Bay Area started a loan modification program in August 2015, where your loan modification is overseen by the court. This is a very good program that has been used in Florida since about 2009 and has had a much higher success rate than people trying loan modifications on their own, and I encourage people who come to me for help saving their homes to use it. A loan modification is usually the best and only way to lower your payments, and is probably the best way to save your home.
However, I see people who want to save their homes but are stretched very thin financially. Usually, they just don’t have much income, but sometimes there is another reason that they are having a hard time financially. Whatever the reason, the fact is that home ownership, especially in the Bay Area, is expensive; property taxes alone average about $500 per month for my clients, things need to be maintained and repaired, etc., and all of that is in addition to the mortgage. When people tell me, for example, they can’t afford to pay the $310 court filing fee for bankruptcy for a week so that we need to delay their bankruptcy filing, that is a strong indication that they cannot afford to be a homeowner here.
If you want to save your home, by all means contact us for a free consultation. We will see if chapter 13 bankruptcy and possibly loan modification is right for you. But be realistic: if you are living paycheck-to-paycheck, you probably don’t have enough income to pay mortgage, property tax, homeowners insurance, and to fix and maintain your home. For example, think about what you would do when your roof needs to be replaced for $15,000, which happens every 20 years or so. In that case, home ownership might not be for you.