You Don’t Have to Lose Your House! A Denver Debt Settlement Attorney Can Help
The CARES Act, which Congress passed in response to the global coronavirus pandemic, instated a moratorium on foreclosures for homes with a federally-backed mortgage or multi-family mortgage loan.
The moratorium initially ended in August, but has since been extended for single-family homes through December 31, 2020, when the Federal Housing Finance Agency, (FHFA) stepped in after Congress took a month-long recess without renewing a coronavirus aid package. According to Fannie Mae, about 70 percent of all mortgages – 28 million homeowners – are backed by the government, and thus currently protected from entering foreclosure.
And although data shows that foreclosures in the U.S. have significantly declined overall, the risk of future foreclosures remains high if homeowners are not able to work out a payment plan with their mortgage lender or modify their mortgages by January 1, 2021.
Who qualifies under the foreclosure moratorium?
Under Fannie Mae’s guidelines for single-family mortgages:
- Homeowners who have been adversely impacted by the pandemic can request mortgage assistance through their mortgage servicer.
- Foreclosure-related activities (except those involving vacant or abandoned properties) and evictions of occupants from real estate owned by Fannie Mae are suspended until December 31, 2020.
- Homeowners are eligible for a forbearance plan to suspend their mortgage payments for up to 12 months. Most are not required to pay back their missed payments in one lump sum. Homeowners in forbearance will not incur late fees or any additional fees.
- If a homeowner was up-to-date on their mortgage before entering forbearance, the loan servicer must report it as up-to-date to the credit bureaus.
- After forbearance, the loan servicer must work with the borrower to set up an agreeable payment plan or reduce monthly payment amounts as needed. This may come in the form of a modified mortgage, which can lower your mortgage interest rate.
- Tenants in housing that have not been foreclosed upon, such as those renting from private landlords or property management groups, are not included in the moratorium.
How do I know if I have a federally-backed mortgage?
Your mortgage is federally-backed if it is an FHA, VA, or USDA loan, or if your mortgage is serviced by Fannie Mae or Freddie Mac. You can determine whether you have one of these mortgages by visiting KnowYourOptions.com/loanlookup.
What if I don’t have a federally-backed mortgage and am in financial trouble?
If your home loan isn’t serviced with a federally-backed mortgage, you must speak to your lender to discuss forbearance or payment plan options.
Even with a new payment plan in place, it’s possible you may struggle to make complete payments each month. This is totally understandable, considering the amount of financial struggles Americans have faced because of the COVID-19 pandemic.
In an instance like this, you may benefit from legal services such as debt settlement or even filing for bankruptcy. If you live in Denver, Littleton, Arvada, Aurora, Broomfield, and the surrounding communities, bankruptcy attorneys Wink and Wink have helped many homeowners save their homes from foreclosure and can help you find relief.
How can debt settlement help me if I’m facing foreclosure?
If you’re behind on mortgage payments and do not have a loan that is protected by the current moratorium, it is possible that you will soon be facing foreclosure, especially if you cannot come to an agreement with your servicer regarding a payment plan or loan term changes.
The best advice you can get is that you should stay one step ahead in situations like these. If you know you’re facing foreclosure, but don’t have enough money to make your loan payments as normal because of your other existing unsecured debts, you may benefit from debt settlement.
Debt settlement involves an attorney directly negotiating with your creditors outside of bankruptcy to achieve a reduction in the balance you owe to your creditors. In fact, most creditors, especially credit card or medical ones, will accept a fraction of the balance owed to fully settle the outstanding debt. Debt settlement attorneys Gigi and Mike Wink, with our law firm, report reducing debt for their clients by an average of 50 percent!
With your other debts reduced or paid off, you free up your monthly income to put toward your mortgage and other housing expenses. You are then able to keep up with your mortgage payments, or handle a payment plan that will help keep you in your own home.
Is debt settlement different from bankruptcy? Do I qualify?
Bankruptcy and debt settlement are very different things. Bankruptcy is a legal process that can still result in you losing significant property and other assets. Through debt settlement, the only thing you have to lose is the debt!
Not everyone will qualify for debt settlement on every account they owe. For example, you should be in default of your debts by at least three months to begin debt settlement proceedings. If you’ve been paying your monthly bills on time, your creditors have no reason to settle because you’re a reliable source of income for them.
You will also need a lump sum of cash to pay the balance on each of your debts. It’s much easier to settle when your creditor knows that they can rely on you to pay off the balance of the amount negotiated than they are to accept a settlement with ongoing monthly payments.
And finally, know that not every debt can be settled. Unsecured debts, such as credit card bills or medical bills – those without collateral tied to it – can be settled. Secured debts, like car loans or your mortgage, cannot be settled unless you are willing to give up those properties. (We’re betting that you don’t.) Student loans also are difficult to settle.
If you owe taxes to the government, the settlement process for those is very different from regular, unsecured debt, and you’ll need to work with a tax resolution attorney to complete it.
If you know anything at all about bankruptcy, you can see now that debt settlement is very different from it. Bankruptcy is a quicker solution for resolving bad debt, but debt settlement takes much longer to achieve. Bankruptcy also can legally stop a foreclosure proceeding. Tax consequences of each are very different as well. Debt forgiven through settlement is typically taxable, however your discharged debt through bankruptcy is not.
Which one is better for your specific situation requires the expertise of a lawyer familiar with both options and is not a decision to make hastily or without all the information.
Who can I talk to about debt settlement before the foreclosure moratorium ends?
To settle your unsecured debts so you can put your income toward your mortgage, you’ll need to work with a Denver or Broomfield attorney who specializes in debt settlement.
Wink and Wink offers you two options: Gailyn Wink or Michael Wink. Both have been helping people get out of debt since 2009 and have strong financial backgrounds along with their legal expertise. At Wink and Wink, we offer free consultations; either Michael or Gailyn will review your situation and let you know the best next steps for you to take if you’ve been affected by the coronavirus pandemic. Call 303-410-1720 to learn more.