Los Angeles Bankruptcy Blog

Is this really a good idea?

Your mortgage was a bad proposition from Day One. You didn’t read the fine print, and Mr. Sleazeball Lender told you this was a good loan. Nine easy payments of only $800 a month, and then things adjust. What exactly does that mean? Well, you found out, didn’t you? Three months at $2000 a month, and then now it’s at $3600 monthly. When will the mortgage payment go up again, and what will it be then?

Well, of course, you don’t want to move. You can’t refi… it’s too soon, and you have no more equity anyway. And you have some available credit on the credit cards. Just take cash out of the credit card stash and apply that to the mortgages that you can no longer afford. The writing is on the wall, but you don’t want to face reality.

You cannot afford that house.

Only the grace of Countrywide’s HOPE department will let you do a loan modification so that you can afford your dream house turned mansion of nightmares. Sure, they don’t want to own your home and have to sell it some poor shlub for less than it’s worth, but really, do you want to gamble your future on your mortgage servicer being nice to you? Reality is, you’re stuck with a horrible loan, and borrowing from friends, family and even Capital One is just putting off the inevitable.

Robbing Peter to pay Paul is not really fair to Peter. You’re not really going to repay that credit card that’s making the next month’s mortgage while you buy some time. Desperate times calls for desperate measures.

And finally, the credit cards are maxed out. Then what?

You do what you should have done six months ago. It’s time to get ready to move.

But what of the debt?

Just file bankruptcy.

But there may be problems. Can we all agree that if you put a lot of debt on the credit cards and then file bankruptcy that the credit card companies might have a problem with that? Sure they will. They’re not giving out free money. Taking out $3000 and then telling them to pound sand probably will set off some alarms. It’s not Chase or Bank of America’s fault that some shyster lender lied to you about your house’s monthly payment. You borrowed money and they kind of expect it back. Filing bankruptcy will only create new problems, potentially.

In our world, these are called 707(b) and 707(c) motions from the United States Trustee. Words like fraud, bad faith and totality of the circumstances puts your case in the hands of a judge who may or may not see things your way.

We’re very sympathetic to your situation; many people come to our office and we need to help them face difficult truths. But using credit cards to pay mortgages when you know you can afford neither is just not a good idea. And despite the rumors you hear, no bankruptcy attorney, not even this Los Angeles bankruptcy lawyer, can change your mortgage loan. (we can help you catch up on arrearages, however).

It’s a sad situation, and one that breaks my heart. Constant re-finanacing, the downturn in housing prices, being lied to about your loan, losing a job after getting the loans, it all leads to a payment that’s unaffordable. But the good news is: at least I can help you turn the page and start your life over.

Simplify.