By PETER ROSENTHAL, President
V.I.P. Trust Deed Company
December 1995
Q: Our home is in foreclosure, and we have received many, many offers to help us. Some of these want the deed to the house (which will then be rented back to us); others tell us to deed the house to them so that our credit will be saved.
We have also received several proposals from attorneys to “stop the foreclosure”; in talking to them, we have found out that his involves bankruptcy.
Other than the house situation, our credit is excellent. My question is: will the bankruptcy wave our house?
A: Anybody who is faced with a foreclosure situation is familiar with the tons of mail that you are receiving, including phone calls, visits, solicitations, etc.
Welcome to the world of the “foreclosure chasers”! Who are they? Well, to modify a joke about the world’s “second-oldest” profession, there is a question: What is the difference between a catfish and a foreclosure chaser?
The answer is: One is a slimy, mud-sucking scavenger that eats filth – the other is a fish.
I have written previous columns about the fraud of “deed your house to me for a fee” offers; now, let’s chat about bankruptcy.
I can’t answer your particular situation, because I would need to know if there is “substantial” equity in your house, as well as the amount of your other debts. If there is little or no equity in the house and you do not have a substantial debt load, bankruptcy is probably the worst thing you could do.
Seek out the advice of a CPA or attorney for a second opinion. The bankruptcy attorney “mills” that contact you are “debtors’ attorneys” and, frankly, are not very interested in your welfare. They devote very little (if any) individual time and do not – I repeat do not – stop your foreclosure. They, in fact, only delay it. You do not escape the debt, and with little or no equity, the only benefit is a 1-3 month delay in the foreclosure.
Debtors’ attorneys usually won’t tell you that the secured lender will file a motion with the bankruptcy court for a “relief of stay” and get into court within 30 days of that motion and usually get relief (unless there is substantial equity).
The attorney will also avoid the fact that there will be a charge (larger than the initial fee) to represent you in bankruptcy court and then lose.
There certainly are good debtors’ bankruptcy attorneys around, but I certainly don’t recommend the bankruptcy “mills”.
Bottom line: Why file bankruptcy to save little or no equity and ruin the rest of your perfectly good credit?
On the other hand, with substantial equity and/or substantial debts, bankruptcy is a valid alternative.
But please, shop around for a knowledgeable, “friendly” attorney.
Food for thought: If there is little or no equity, try to work out a deal with your lender for a “Deed in Lieu of Foreclosure”. If there is substantial equity, definitely get professional help.
Peter Rosenthal
VIP Trust Deed Company