Bank Foreclosure Moratorium will buy some you some time but if your goal is to stay in your home you’ll need to save some cash or file a chapter 13

Foreclosures have slowed down this month across the nation not because people are staying current on their mortgages but because the banks are facing scrutiny over their foreclosure proceedings. This is really a big issue for states that use judicial foreclosure which California does not, but Californian’s are getting the benefit from the slow down as some banks have voluntarily stopped foreclosures for this month. I was going to file a chapter 7 case in which we surrendered the house last week a day before the date of sale at a trustee sale but a day before that the title company halted the foreclosure. It is now scheduled one month out which buys my client another month to live in his house for free and once he files he’ll get another 2-4 months before they can foreclose again. In his case he can’t afford his house and its 50% underwater so he had not intention of trying to keep it but it will allow him to save some money and be in a better position to move and get a fresh start once his bankruptcy case is filed and he gets a discharge. For people trying to save money to get caught up in their arrearages and still be able to file a chapter 7 this moratorium is a blessing, for others it just stalls the inevitable but gives them a place to stay for longer.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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