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Mortgage Relief Program Qualifications: Which is Better?
By the time American consumers are facing a personal debt crisis, it is often too late for credit counseling and the use of traditional consolidation. At this major financial hurdle, bankruptcy often creeps into the equation as the only known option to somehow start anew. In recent years, however, debt settlement solutions have come to the forefront of debt mortgage relief program qualifications and there’s good reason it is a method that has helped hundreds of thousands of Americans from financial ruin.
Chapter 13 Covers Most Debt- In Chapter 13 bankruptcy, such specific debts as tax debt, child support arrears, car payments, and mortgage arrears can be rolled into one monthly payment. This is good news because the majority of traditional debt consolidation services allow only specific debts in the settlement plan. Wouldn’t you rather have protection from every one of your creditors?
Chapter 13 Severely Reduces The Total Debt- With the power of a Federal judge ordering your creditors to stick to the repayment plan, you may be allowed to pay as little a 10% of any unsecured debts. Of course there are certain mortgage relief program qualifications you must meet. If you can meet these qualifications the other 90% will be eliminated. You’ll be able to pay off your debts much more quickly because of the severe reduction in principal owed. This is something that traditional debt consolidation plans cannot do. They can only ask the creditor to lower the interest rates and reduce the balances owing.
What is an acceptable hardship situation? While each borrower facing a unique situation, most lenders have generally agreed that divorce or separation, job loss, decreased income, illness or medical expenses, death of family member, military duty, incarceration and natural disaster are all valid reasons to submit a loan modification application. Do I have to prove my hardship? The lender will ask for a Hardship Letter which will briefly describe your situation, what steps have been take to correct the situation and your intention to remain current in the future. Borrowers can use an outline and hardship letter template to help write a convincing hardship letter. What loan modification forms are required and where do I get them? Your application will have to include a borrowers statement that provides your general information and financial statements that detail your income and expenses so that lender has a snapshot of your current financial situation.
Chapter 13 Attorneys Work For You- Unlike a debt consolidator, your Chapter 13 attorney will vigorously represent only your best interests. He has a legal and ethical obligation to do so, and must comply with his obligations as regulated by state law. Many times debt consolidation companies are privately run, and may, in fact, be sponsored by the creditor themselves. With a Chapter 13 attorney on your side, you have the unique opportunity of having your rights backed up under strict legal requirements. Chapter 13 Protects Your Property- You won’t be required to post any collateral in order to proceed with Chapter 13 bankruptcy if you cannot afford the proposed monthly payments. Many home equity loans and traditional debt consolidation companies force you to risk losing your home and your property.
Chapter 13 Takes Care of Your Important Debts First- Most of your secured loans will be paid off first at the conclusion of a Chapter 13 bankruptcy plan. This includes such things as mortgage and automobile payment defaults. Unsecured debt payments such as credit cards and medical bills are taken care of after secured and other important claims have been paid. You will probably incur penalty charges under a normal debt consolidation company in return for delaying payments to unsecured creditors. These companies also give preferential consideration to home finance companies and car payments, which leaves little for the remaining claims. The bigger the balance owing, the bigger the penalty charges. Chapter 13 Requires the Creditor to File A Proof OF Claim- Under Chapter 13 bankruptcy all unfiled claims are eliminated if the creditor fails to file a proof of claim with the Bankruptcy Court. It happens fairly frequently that a creditor may be listed in the Chapter 13 bankruptcy file, but forget to do the proper paperwork, thus effectively eliminating themselves from the consolidation. If you complete the terms of your Chapter 13 repayment plan, such claims are ruled invalid, and you never have to pay them back.
Learn more about Obama Mortgage Relief Plan Qualifications.
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