Foreclosure Loss Mitigation and Bankruptcy

Filing for bankruptcy can be a popular choice for those looking to save their home from foreclosure or avoid deficiency judgments. If you are able to combine what is known as foreclosure loss mitigation with your bankruptcy, you could possibly save your home or other personal assets.  What follows is a look at three possible advantages of pursuing foreclosure loss mitigation with your Dallas bankruptcy filing.

Does Away with Deficiency Judgment

While avoiding foreclosure can be difficult to do even in a bankruptcy filing, avoiding a deficiency judgment is much more realistic. In fact, most people only care about dodging the deficiency judgment.  By doing so, you are able to rid yourself of personal obligation to the debt outside of what your home sells for at a foreclosure sale. Many people will happily walk away with that settlement.

Change the Lender’s Mind

If your lender finds out that he will not be able to collect a deficiency judgment, he may choose to consider alternatives to foreclosure. That’s because the lender will not have the ability to collect the full amount of money owed to him. While foreclosure loss mitigation cannot stop foreclosure, it can convince your lender to voluntarily stop it.

Free Up Money

If your property is worth less than your first mortgage, loss mitigation can actually eliminate your second mortgage and clear other debts. In turn, you can then apply the cash you now have to pay off your first mortgage.

Loss mitigation programs can only be found in certain areas and districts, but they are worth looking into if you are filing for bankruptcy and looking to avoid a foreclosure or deficiency judgment.