Bankruptcy vs. Foreclosure

Learn the Pros & Cons of all Your Options

As real estate and bankruptcy attorneys, Cain & Associates, PLLC receives many inquiries about what the right thing to do is when someone is facing foreclosure on their home. As with most legal issues, there is not one “catch-all” solution, no one quick fix or easy answer to the problem. Each individual or family’s problem requires individualized strategies.

A person can become overwhelmed by the information available on the internet and other media about what to do. Solutions to Nashville foreclosure defense related problems include Nashville short sales, Nashville loan modifications, litigation to stop your Nashville foreclosure, and filing a Nashville Chapter 7 or Chapter 13 bankruptcy.

Information about Loan Modifications

Nashville Loan modifications have been publicized as readily available and easy to accomplish. The federal government has touted different loan modification programs as the solution to the mortgage meltdown and credit crisis. The attorneys at Cain & Associates are very wary of the potential to successfully navigate a Nashville loan modification. The reality is that many homes these days are not worth what is owed to the mortgage lender and therefore modifying mortgage payments in many cases just delays the inevitable, a default and eventual Nashville foreclosure.

In our experience, the only Nashville loan modifications that have any chance of success are those that include principal reductions as opposed to just adding the missed payments to the back end of the loan, and lenders are notoriously hesitant to reduce the principal amount of their secured interest. Most of the time the lender, or the person working on behalf of the lender, will try to re-qualify the homeowner for the loan, running new debt to income ratios, and many times the lender’s representative will deny the modification based on the new qualifying criteria. In many cases the denial comes several months into the loan modification process, after many missed payments, and this makes it much harder for the homeowner to solve their mortgage deficiency problem. Therefore, Nashville loan modifications are in many instances doomed to fail.

Is a short sale right for you?

A Nashville short sale of the property can be valuable to the homeowner if the homeowner does not have other debt in addition to the mortgage amount that is dragging the homeowner down. Selling a property when in debt is usually a good thing. However, when a homeowner accomplishes a short sale only to be left with overwhelming additional debt, or if the short sale results in the homeowner being required to execute a promissory note in favor of the short sale lender for the short sale deficiency, the short sale unfortunately does not do much to alleviate the overall debt load of the homeowner. In these situations, the homeowner solves only one of many problems and is left having to deal with all of the non-mortgage debt after the short sale is long over.

Foreclosure Defense- So You Don’t Have to Lose Your Home

Another popular strategy to alleviate pressure being applied to a homeowner by the mortgage lender is for the homeowner to file a lawsuit, a Nashville foreclosure defense action, against the mortgage lender for any number of causes of action, the goal being to delay or hold the lender accountable for improper procedure in the foreclosure process. This strategy, however, has its drawbacks. Most notably, the lawyer handling the “foreclosure defense” legal work will usually charge an up-front retainer, most of the time in the thousands of dollars. Other times the lawyer will submit a bill to the homeowner on a monthly basis in order to be paid.

This course of action often results in the homeowner paying the lawyer to litigate the case against the lender rather than trying to make their mortgage payments, and this very often leads to an inevitable Nashville foreclosure after the homeowner expends thousands, sometimes tens of thousands of dollars, in legal bills. Beware of lawyers trying to capitalize on your Nashville foreclosure situation. It is rare that a typical lawyer can succeed in litigation against a foreclosing lender. Any homeowner wanting to file a lawsuit against their mortgage lender for foreclosure-related causes of action should contact the real estate lawyers at Cain & Associates to consult about the pitfalls associated with this type of litigation.

Giving Honest & Upfront Legal Advice

Many times filing for bankruptcy protection is the best and least expensive option for homeowner’s facing foreclosure. In many cases, when the homeowner is fortunate enough to have a job and is earning sufficient pay, the homeowner can file a Chapter 13 bankruptcy and use the bankruptcy code to force the lender to accept repayment of missed mortgage payments over a five-year period. The lender does not get to negotiate or make any decisions; the bankruptcy code simply requires the lender to adhere to the Chapter 13 plan submitted by the homeowner and confirmed by the bankruptcy court. A Chapter 13 bankruptcy will also often provide the flexibility to cut the homeowner’s unsecured debt payments to whatever the homeowner can afford according to the bankruptcy code above and beyond what it will cost to keep the home. Contact Cain & Associates today if you are facing a Nashville foreclosure need to strategize ways to keep your home.

For homeowners who do not feel compelled to keep their home (i.e. if the home is not worth what is owed or if there is deferred maintenance), who have debt in addition to the mortgage, who have lost their job or are under-employed, and who do not want to continue to try and negotiate with a lender who may be acting antagonistically or unfairly, a Chapter 7 bankruptcy might be the best option. When facing a foreclosure, a Nashville Chapter 7 bankruptcy will stop all foreclosure proceedings in their tracks. The automatic stay provisions of the bankruptcy code absolutely require the lender to halt all collection activities, including foreclosures, lawsuits, garnishments, etc. There are other tremendous benefits a Chapter 7 bankruptcy provides, including a complete discharge of all debt owed to all creditors. A Chapter 7 bankruptcy is the classic “fresh-start” bankruptcy proceeding. This type of bankruptcy typically takes approximately ninety to one hundred twenty days from start to finish, is a simple process compared to that of trying to stop foreclosure by traditional means, and is usually the least expensive option for the homeowner.

Filing for bankruptcy is never something homeowners seek to do. The bankruptcy code, however, is one of the most powerful tools consumers have at their disposal to stop harassing creditors. A homeowner facing foreclosure has numerous options at their disposal, one of them being the protection afforded by the bankruptcy code. It is critical that a homeowner facing foreclosure consult a lawyer who understands the big picture as it relates to homeownership, debt, and the foreclosure process. At C & A, we are real estate and bankruptcy attorneys that understand the process from start to finish. We are ready to consult with you about issues you are facing with your home, your debt, and possibly your bankruptcy. Contact Attorney Cain at Cain & Associates today to get your life and debt load on track and under control.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.
Cain & Associates, PLLC - Nashville Bankruptcy Lawyer
Located at 2874 Elm Hill Pike Nashville, TN 37214. View Map
Phone: (615) 649-5485