Many clients insist on keeping their home no matter what the circumstances. One of Mr. Taieb’s clients has all types of water damage which could cost thousands of dollars to repair. However, she doesn’t want to pay to move when she is dumping thousands of dollars into repairing a home that has no equity and where she would be adding almost $70,000 to the mortgage if the modification is approved.
What benefit is the loan modification. The major benefit is that it allows you to put all the mortgage arrears to the back of the loan and in certain instances lowers the mortgage payment or interest rate.
However, the issue most of Mr. Taieb’s clients don’t ask is the following:
Even though I am saving my home with a new mortgage, will I want to have a mortgage for 30 or 40 years when my home is worth substantially less than I owe on it.
The American Dream is to reach an age where you no longer have a mortgage rather than having a mortgage when you die. Also, if your home is underwater to begin with, why not just walk away and get a fresh start.
Mr. Taieb understands that your home is your castle. However, why would anybody logically throw $100,000 in arrears to the balance of the mortgage when it is underwater to begin with?
However, if part of your mortgage arrears are forgiven please check with your CPA since there could be tax implications.
In many cases it may be better to just file a Chapter 7, if you qualify, buy time and get a fresh start.
It’s your home. Try to think this through logically before spending a fortune on a home underwater.
Steven N. Taieb, Esq. is here to help you and is a South Jersey Bankruptcy Attorney who has helped over 7000 people with their financial problems for the past 32 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.