Modesto Bankruptcy Lawyer Blog

Modesto homeowners who have experienced foreclosure may not be done paying, according to a recent article in the Modesto Bee. According to the July 22, 2010 story, people who refinance their homes typically take out a first mortgage at 80 percent of the home's appraised value and a second mortgage for the remaining 20 percent. If foreclosure occurs, then both loans need to be settled with the loan holders. However, after foreclosure of the first (primary) mortgage, the secondary loan company will often file suit against the former homeowner to recoup their loss if it's not covered in the original foreclosure.

Since home prices continue to drop at record rates, many homeowners are unable to complete even short sales due to the nature of the 80-20 structure. Usually, one lender would let the owner out of the loan but the other won't, eliminating the chance for a short sale. This is when foreclosure must take place. And if the secondary lender is not satisfied, homeowners may still owe 20 percent of the home's original purchase price.

Furthermore, according to the article, the holder of the second mortgage can also tack on interest, late charges and attorney's fees in addition to the face value of the original 20 percent loan. Facing this unforeseen debt after foreclosure is enough to seriously threaten the financial security of many Modesto families. If you've been foreclosed on or are facing foreclosure, you might also think about filing for bankruptcy. A bankruptcy attorney in Modesto can help you weigh your options to see what would work best for your situation.

RealtyTrac, a website that tracks foreclosure properties in the U.S., recently listed Modesto and most of Stanislaus County as two of the highest concentrations of housing foreclosures in the nation. Based in Irvine, California, RealtyTrac aggregated housing data at the state, county and city level to develop statistical reports for housing units that received a foreclosure filing in June 2010.

According to the data, the city of Modesto averaged foreclosures on 1 in every 117 housing units in June. The average for Stanislaus County was even higher, averaging 1 in every 99 housing units. By comparison, the state of California as a whole averaged foreclosures on 1 in every 194 housing units and the national average was 1 in every 411 housing units.

While other states are slowly experiencing economic improvement, the state of California continues to see a rise in unemployment, foreclosures and debt. From June 2009 to June 2010, Google Data reports that the unemployment rate in California rose from 11.6% to 12.2%. In addition to those who have already experienced foreclosure, there are countless homeowners who are on the verge of losing their homes by year's end due to continued unemployment and underemployment.

Bankruptcy May Be An Option to Stop Foreclosure
If you're facing foreclosure, a professional bankruptcy attorney may be able to help you save your home. Chapter 7 or Chapter 13 bankruptcy give homeowners options when it comes to financial restructuring and dealing with overwhelming bills. While bankruptcy isn't ideal for everyone, consulting a lawyer can help you make an educated decision about your choices.

Several large California nonprofits have recently had to reorganize and/or declare bankruptcy in order to keep their doors open. Effective July 1, 2010, American Red Cross chapters in Stanislaus and San Joaquin counties folded into the Sacramento-Sierra regional organization in order to continue providing services. Offices in Modesto and Stockton are still open and operating as normal. The consolidated chapters will still continue to offer emergency assistance to individuals and families as needed, but any unnecessary expenses have been cut drastically.

Additionally, two support non-profits tied to Yosemite National Park have also folded into each other to save money. The Yosemite Association and the Yosemite Conservancy will now work together on fund-raising efforts and educational efforts. Even the Stanislaus United Way is considering collaborating with other offices to reduce expenses as an alternative to closing. Other nonprofits, such as the Modesto YMCA, have simply had to shut down due to financial constraints. Still other businesses, such as the Fresno Metropolitan Museum, have filed for bankruptcy in an effort to get back on their feet.

Filing for Commercial Bankruptcy
Non-profits have many expenses to meet, including payroll, benefits and tax filings. Just like any other business, these costs can become overwhelming in times of economic crisis. If your non-profit business is struggling to make ends meet, you may consider contacting a commercial bankruptcy attorney who can advise you on your options. Chapter 11 bankruptcy is designed to reorganize commercial finances and sell off assets in order to pay off outstanding debts. Non-profits can also file for Chapter 13 bankruptcy in order to reduce debts and get on a 3 to 5 year repayment schedule based on financial capability.