Interviewer: What happens if someone did it themselves and they failed a chapter 13? Do they end up in a worse position and not having them at all or what happens?
James Logan: You can file more than one chapter 13 but they changed the bankruptcy laws in 2005. If you have a case that did not work out within a year before filing a new case, the automatic stay that we talked about will only go into effect for 30 days. If you’ve got two cases that were dismissed within a year before filing, your automatic stay may not go into effect at all. I do see that occasionally where people call me and they’ve had two other cases and their house is going to auction. They can’t file anything that’s going to stop the auction because they’ve had two other cases that didn’t work out. That being said, if you file on your own and the case doesn’t work out, that’s kind of like strike 1 and the second case falls out, that’s strike 2 and you might not get a third strike, you might only get two strikes. So, that’s one reason not to try to file a case on your own.
It is Not Advisable to Wait Too Long in the Foreclosure Process to File a Bankruptcy
Interviewer: Why is it not good for people to wait too long in the foreclosure process to file a bankruptcy? What’s wrong if you just wait till the last second?
James Logan: The fees and cost keep increasing. Every time you wait, if you can file a bankruptcy before they advertise a sale, let’s say it’s $1,500 on advertisements, and the longer you wait the more the attorney’s fees and the mortgage company are going to pile up. The farther behind you’re going to be on the mortgage, this can mean your plan payments are going to go up. The main reason is the cost just keeps increasing and you’re going to make it that much more difficult. If you want to ultimately hold on to the house, you want to do it as soon as possible.
If an Individual is Just Looking to Buy Time then They May Delay Filing Bankruptcy
Some people are just looking to buy time. In that case, we would just file a chapter 7 right before the auction and you would want to wait as long as you can because you know you’re going to give up the house but you just need as much time as you can to find a place to live and save up some money. In those kinds of cases, you would want to wait till the last minute but better to come see us early and figure out what your strategy is going to be than to wait till last minute and lose any options you may have. The sooner you come see us the more options you have and you still have the option of mediation. If you get to see us a couple of months ahead of time, you still have the option of working in a loan modification. If you wait till last minute, those aren’t options. The only option left is file a bankruptcy either chapter 7 or chapter 13.
Realistic Expectations From the Loan Modification Process in Maryland
Interviewer: What’s the realistic loan modification versus unrealistic one? What are some numbers in a ballpark?
James Logan: You have to have the ability to make the payments under the modified loan, that’s really the main thing. So, if you’re unemployed and you have been able to find a job for a year or two, it’s unlikely that the loan modification is going to be offered or is even going to work for you. But on the other hand, if you’ve had steady employment and there’s a reason why you got behind and the numbers make sense, then, certainly a loan modification is much more likely outcome. On either case, the mediation will allow you to contact somebody from the mortgage company and speed up the process and get a clear answer of why there’s even going to be a possibility.