On behalf of Debt Advisors, S.C.
A recent settlement with the State Attorney General of Wisconsin and 48 other states looked like a light at the end of the tunnel for homeowners who face foreclosure or went through a foreclosure from 2008 to 2011. However, officials are now saying that the proceeds from the settlement may only make a small dent in efforts to decrease the number of foreclosures, and may only help a small number of homeowners who are struggling financially.
The suit that brought about the recent settlement was instituted against the nation’s five major mortgage lenders. State officials brought the action to recover a portion of the money received by banks from federal government bailouts. These dollars were intended to help stimulate a sinking economy and help homeowners stay in their houses after the loss of jobs. But most homeowners did not receive financial assistance, and many are still dealing with tight finances. The settlement may offer a small boost for a short time.
Homeowners behind on their mortgage payments may receive enough to cover one or two months of payments. But for those dealing with unemployment, a decrease in available jobs, and the prospect of waiting six months or more until the next paycheck, two mortgage payments will likely not be enough to keep them in their homes.
Other options exist for individuals facing credit card debt, job loss and high medical bills. One is bankruptcy. Filing for bankruptcy can stop a foreclosure proceeding during the pendency of the case. This can give homeowners time to work out a plan that allows them to stay in their homes. Depending on the type of bankruptcy, it may be possible to negotiate a payment plan with the lender, or the discharge of other debt may allow the homeowner to meet future mortgage payments.
When facing foreclosure, it is important not to ignore what is happening in the hope that creditors will just go away. Taking action and seeking legal advice is the best way to explore options and improve outcomes before it is too late.
Source: Channel3000.com, “Experts say Wisconsin’s foreclosure windfall feared not enough,” 4/23/12.