After close to 25 years as a debt consolidation lawyer offering bankruptcy services in Indiana, I’m used to phone calls from desperate people. In recent days, though, I’ve been getting three and four calls per day, all with the same sad story to tell about failed attempts to complete a mortgage modification process.  These are people asking for last-minute help filing individual bankruptcy in Indiana (under Chapter 13 bankruptcy laws in Indiana) to help stop foreclosure on their homes.

Most of the time, the clients have been working diligently with their mortgage companies, mailing in many, many pages of financial information forms, talking on the phone to representatives of the lender, (sometimes being told their paperwork has been lost and having to start all over again), and then, just as they thought the end was in sight – boom! The homeowners answer the doorbell to find a sheriff with a foreclosure notice!

Oh, how angry that makes me! I wish only that these poor people had visited one of the four Zuckerberg bankruptcy law offices earlier.  That way, we would have begun gathering the paperwork needed to file under Chapter 13 bankruptcy law in Indiana nice and early in the game.  As  homeowners began a periodic repayment plan of their other debts, they might have been able to keep current with their mortgage, never needing to be confronted by a sheriff serving papers!  Unfortunately, too many individuals are so fearful of filing personal bankruptcy in Indiana that they wait until the worst case scenario has become a real-life scenario, with them in the “starring” role!

The Columbus bankruptcy lawyers who are my colleagues tell me they’re getting the same desperate “save-my-home” phone calls down there. And, based on a recent article in the Law Review, I realize the same thing is happening nation-wide. The author, Henry Summer, comments that mortgage companies ought to be given the same treatment under the law as debtors.  In other words, he’s saying that the bankruptcy courts should apply the old saying, “What’s good for the goose is good for the gander”.

As I’ve often stated in Bankruptcy in Indiana, the bankruptcy system is designed as a safety net for honest, unfortunate debtors, to give them a chance at a fresh financial start. Summer writes that lenders should be held to the same standard – they should need to prove they are “honest, unfortunate creditors”! If lenders fail to modify a mortgage, they at least shouldn’t have caused further harm to debtors seeking help with mortgage modification.

  • The lender is not honest in the first place if it made a loan to people they knew could probably not afford repay the loan! As a longtime bankruptcy attorney in Indiana, I say “Amen!” to that.
  • If the lender relied on negligently prepared appraisals of the property (so that it would appear to be worth more than it really was) – that lender was not an honest creditor! Again, as a debt consolidation lawyer offering bankruptcy information in Indiana, Amen’s my word.
  • If lenders lose (either out of careless procedures or on purpose) homeowners’ paperwork, thus delaying the process of mortgage modification, they’re not honest creditors! Any of the good bankruptcy attorneys in Indiana would have to agree!

What “punishment” does Henry Summer recommend for these dishonest creditor practices?
Simple. The mortgage they hold would no longer be considered a “secured loan.”  As an unsecured loan, the mortgage would now be subject to discharge by the bankruptcy court.  The dishonest lender would now be in line along with all the other unsecured creditors of the honest and unfortunate debtor! 

 
 
 

 

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