Modesto Bankruptcy Lawyer Blog

The impending expiration of the Mortgage Forgiveness Debt Relief Act has economists and underwater homeowners concerned about a future with enormous tax bills that people can ill afford.

Modesto Chapter 7 bankruptcy lawyers know there has been a lot of discussion in Washington about whether and how to extend relief, but the concern is that in a contentious election year, getting both sides to agree on anything is a long shot.

Here's what is at stake:

Normally in a foreclosure or loan modification, whatever the difference between what you previously owed and what the home resold for or what your new loan amount is, will be treated as income. That means you would have to pay income taxes on it. However, as the government was beginning to see signs of a financial crisis back in 2007, Congress passed this bill in an effort to temporarily suspend such tax hits.

That was major because if someone was extremely upside down on their home, there would be no way they could afford to pay tens of thousands of dollars in taxes after they were forced into foreclosure.

But now that relief is set to expire at the end of this year, which could effect millions of homeowners. There have been some bills proposed that would extend it through the end of 2013, with one even receiving a stamp of approval from the Senate Finance Committee. However, it's not clear how likely it is to pass into law.

This is especially concerning because of a $26 billion settlement agreement inked earlier this year by five major banks and attorneys general in 49 states. The deal stemmed from an effort to rectify the extensive foreclosure abuses by lending institutions. The money is slated to provide homeowners relief in the form of credits and loan modifications.

However, if the debt relief act expires, it may be a wash anyway if homeowners have to pay taxes on forgiven debt.

This is where a bankruptcy may help.

If you're behind on your mortgage payment, first of all, you may not qualify for certain loan modifications anyway. By filing for bankruptcy, you receive an automatic stay, which halts any foreclosure proceeding and stops creditors from harassing you. This may provide you enough time to get your finances back on track.

The second thing that a bankruptcy can do, particularly a Chapter 13, is allow you to restructure your debts in such a way that you will be able to afford making your monthly payments - and therefore keep your home.

Unfortunately, taxes aren't usually dischargeable. However, there are always exceptions. Generally, your tax debts would have to meet the following criteria to qualify:

1. The filing due date for the return was at least three years ago.
2. The return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return is in no way fraudulent.
5. You are not guilty of tax evasion.

However, debts discharged in bankruptcy are not considered taxable. This means that if your mortgage debt was forgiven in a Chapter 7 bankruptcy (as opposed to in a foreclosure), you would not have to pay taxes on that amount.

So if you are underwater on your home, bankruptcy may actually be the smartest way for you to avoid going broke while getting back on track financially.

Continue reading "Rising Concern in Modesto About Loss of Mortgage Debt Relief" »

The economy is shockingly bad and people around the country are struggling to stay in their homes. If your home is involved in foreclosure proceedings, it is important to understand the different types of relief you can obtain in order to save your home.

Our experienced Modesto bankruptcy attorneys can give you the information you need and help guide you through your Modesto foreclosure defense.

The court in Kekauoha-Alisa v. Ameriquest Mortgage Company says that if your home is in foreclosure and you file for chapter 13 bankruptcy in Modesto, there is an immediate stay imposed on the sale of the property. However, it is critical for the lender to notify the public of any postponement of the foreclosure sale.

Foreclosure is running rampant in California. There are several different forms of foreclosure, but there are two that are more common in California. These two forms of foreclosure in California are judicial foreclosures and non-judicial foreclosures. Judicial foreclosures involve cases where the lender files suit to have the property foreclosed on and is a court action against the owner/borrower.

Considering the increasing amount of borrowers who are defaulting on their mortgages, there was the creation of a second form of foreclosure. Non-judicial foreclosure was created to avoid the stigma of being sued and the judicial inefficiency created by the large number of foreclosures. Non-judicial foreclosures do not involve a lawsuit or court proceedings. Instead, the borrower gets notice of the lenders intent to sell the property, and if the borrower is not able to pay the amount they are in default, then the property is sold in a foreclosure sale. Upon the sale, the lender then gets the proceeds and does not seek damages from the borrower. In California, non-judicial foreclosure is regulated by the Civil Code 2924.

Foreclosure sales are frequently postponed because of possible negotiations. The only way to fully stop a foreclosure sale is to pay the pending default amount or to file for bankruptcy.

The Ninth Circuit Court of Appeals has recently heard a case where the application of California statute in non-judicial foreclosure sales was discussed. See Kekauoha-Alisa, et al. v. Ameriquest Mortgage Company, et al., No. 09-60019 (9th Cir. Mar. 26, 2012). Kekauoha-Alisa (Borrower) refinanced her home and executed a promissory note with Ameriquest Mortgage Company (Lender). After defaulting on this loan, borrower commenced foreclosure proceedings and scheduled the foreclosure sale of the property.

Three days before the sale, borrower filed for bankruptcy. As stipulated in state statute, once bankruptcy is filed the sale of any property involved in the bankruptcy is stopped. Statute and the mortgage contract further stipulated that in order to postpone the foreclosure sale, the lender or the lender's representative must make a public announcement of the postponement for it to be valid. Lender knew of this procedural requirement and complied three times. However, on the fourth time the lender sent a company secretary to the auction to postpone the sale and she did not do it correctly.

The court explains that it in order to provide sufficient notice of the sale postponement, the lender or the lender's representative must announce to the potential buyers or post notice.

After petitioning the court for relief from the stay, the court gave the lenders permission to auction of the property. The home was sold and soon after the borrower filed suit against the lender. Borrower argued that by failing to provide notice at the auction, the lender breached the term of the mortgage, breached the non-judicial foreclosure statutory requirements, and engaged in unfair and deceptive business practices.

The Circuit Court looked to California law to guide their decision. In California, when the lender fails to provide the public with notice of the postponement of a foreclosure sale, the postponement is not considered valid or proper. If the lender fails to provide proper postponement, it can be argued that they are engaging in unfair and deceptive trade practices.

Because the lender failed to provide proper notice, the court inferred that the postponement was invalid and thus the lender was engaged in unfair and deceptive business practices. Borrower was able to have the sale of her home voided.

Continue reading "Modesto Foreclosure Defense & Kekauoha-Alisa v. Ameriquest Mortgage " »

A recent article out of St. Louis looks at the two personal bankruptcy options available to all Americans -- Chapter 7 bankruptcy and Chapter 13 bankruptcy..

Modesto bankruptcy lawyers will take a look at which form of bankruptcy could be appropriate for the average consumer struggling with debt. Whether choosing Chapter 7 bankruptcy or Chapter 13 bankruptcy in Modesto, the consumer can obtain debt relief.

Both forms allow for either all or a majority of a person's unsecured debt to be discharged after going through the bankruptcy process. So, both are beneficial. But there are requirements for qualifying that are based on a person's income and their individual situation. That's why consulting with an experienced Modesto bankruptcy lawyer should be your first step if you're considering bankruptcy.

Chapter 7 bankruptcy is the form that most people think of when they think of bankruptcy. This is where a person's debts are discharged and they may be called on to give up some of their possessions to sell and pay off debt. But that's not always the case. There are many situations where a person has few pricey assets or they owe more on them than they're worth and creditors aren't interested in them.

That means a person can keep their assets and still have their credit card, medical and other debt wiped clean. This is a form of bankruptcy considered for non-wage earners or people who have more debt than their income can reasonably satisfy. They are unable to pay their debts either because of job loss or are overwhelmed with debt.

According to statistics from the American Bankruptcy Institute, Chapter 7 bankruptcies consistently make up about 70 percent of personal bankruptcies nationwide.

In the first two quarters of 2011, they made up 71.3 and 72.32 percent of bankruptcies, respectively. In 2010, they peaked at 73.45 percent during the second quarter and going back a few years they made up as low as 57.45 percent in 2006. The number of bankruptcies has more than doubled from 597,965 in 2006 to 1,536,799 in 2010. Numbers for 2011 should be relatively close to 2010 numbers.

But studies have shown that Chapter 13 bankruptcies have become increasingly popular. In 2005, lawmakers changed the standards for filing for Chapter 7 bankruptcy, making it more difficult. Since then, some people have been forced to file Chapter 13 because they make too much money for Chapter 7.

This may be because people who make money, but whose houses are dragging them down, are looking at bankruptcy as a viable option. If people bought a house at the peak of housing prices only to see them crumble and currently are living in a house that is worth 1/4 of what they paid for it, they may allow it to go into foreclosure.

That could be a strategic decision or it could be because of job loss or job transfer. In these cases, it may be possible for the bank to come after the homeowner and seek a deficiency judgment, which means the bank attempts to get the homeowner to pay the difference between the mortgage amount and the sale price at auction after foreclosure.

For these people, perhaps Chapter 13 bankruptcy in Modesto fits best. Under Chapter 13, all debts aren't simply discharged like in Chapter 7. In this form of bankruptcy, the debtor must set up a payment plan, typically over a 3- to 5-year period. During this time, they make monthly payments to pay back some of the debt. The exact portion is determined on a case-by-case basis.

After the payments are made, the debt is considered discharged. While this may be more expensive, it guarantees that a person's assets remain intact. This includes a house, vehicles and other assets.

Continue reading "Which Chapter of Bankruptcy in Modesto Is Right For You? 7 or 13?" »

A recent Wall Street Journal article reports that the number of deficiency judgments is on the rise as banks attempt to make as much money as they can after being hit hard with foreclosures.

A deficiency judgment is an order from a judge that authorizes the bank to go after the original homeowner for the difference between what the amount of the loan was and how much the foreclosure sold for at auction. For instance, if the bank gives a loan for $175,000 and the house slips into foreclosure and is sold at auction for $45,000, that means the bank can go after the original homeowner for the $130,000 difference.

For a person who just lost their home to foreclosure, a deficiency judgement notice is devastating. If they had the $130,000 to spare, they probably would have continued making payments. But, luckily, filing for bankruptcy in Modesto can wipe that judgment away.

Like other debts, home-related debt can be tossed out after completing the bankruptcy process in Modesto. Modesto bankruptcy lawyers have helped countless clients who have been put in a bad situation because of foreclosure. Whether it was a job loss, outstanding medical bills or other issues that led to money problems, bankruptcy can get you back on your feet.

The story looks at the case of a man who had a vacation home in Florida. When he lost his job, he lost his house to foreclosure last year. But recently, he got a call telling him he owed $193,000 -- the difference between what the house was sold for and what the original loan was. Because of a huge dip in prices in Florida, his house got only a quarter of what he paid for it at auction.

In California, luckily, there are strict laws about when deficiency judgements can be granted. They can't be granted in nonjudicial foreclosures and they are limited by fair market value of the property. But it can still happen. We have not yet seen banks play by rules in any regard.

Foreclosure defense lawyers are reporting that they are seeing a big spike in deficiency judgments as banks struggle to make up for the money lost to the millions of foreclosures nationwide. A Wall Street Journal report of several hundred deficiency judgments nationwide showed that the average debt was $100,000. It reports that 64 percent of the 4.5 million foreclosures since 2007 were in the 41 states that allow deficiency judgments.

While lenders won't say when they decide to attempt to get a deficiency judgment, it appears they are going after people who considered a strategic default by walking away from a house based on its loss of value rather than inability to pay.

Experts believe banks are more and more panicky with the influx of foreclosures that have taken over the real estate market. They are losing millions of dollars in bad loans. The article reports that investors have been looking at deficiency judgments as a money maker, taking over the judgments and going to bankruptcy court or through debt collectors to make back as much money as they can.

The bottom line is that bankruptcy can save a homeowner who has dealt with foreclosure from getting slammed with a deficiency judgement.

Continue reading "Deficiency Judgments On the Rise in Modesto, So Protect Yourself With Bankruptcy" »

Here we are some 12 months after most major banks essentially halted their mortgage foreclosure procedures because of obvious signs of robo-signed documents and other inaccurate paperwork filed in order to strip Modesto homeowners of their houses and their legal rights.

And yet as a new report by Americanbanker.com shows banks are continuing to use robo-signed documents in mortgage foreclosure cases, even as the country's five largest banks are working on a settlement with 50 states because of the problems with foreclosure in Modesto and elsewhere.

It's outrageous that banks are continuing to rely on these shady practices in order to steal people's homes. They obviously haven't learned their lesson. An experienced and aggressive Modesto Bankruptcy Lawyer sees these problems, but also knows that the banks have a lot of power. The only true way to stop foreclosure is to file for bankruptcy in Modesto. This automatically stops a foreclosure in its tracks and allows the homeowner to work with the bankruptcy court to stay in their house or to find the solution that best protects the consumer.

According to the news article, reporters reviewed several dozen documents over a period of time. And the documents revealed that major banks, such as Bank of America, Wells Fargo, Ally Financial OneWest Financial are backdating paperwork that should have been signed and processed at the time of transaction.

Some documents, the website reports, showed signatures from bank employees that are supposed to represent lenders and companies that don't exist. And the documents were signed this year!

Robo-signed documents are essentially documentation signed by mortgage servicers -- companies hired by banks to help them process and file foreclosures with the court. While bank officials' names appear on these documents as if they signed them, they were actually signed by people who had no authority and no knowledge of the underlying case.

Further, many of these documents either contain incorrect information or have been signed after the fact. This kind of deceit continues to permit banks to run over struggling homeowners -- the very taxpayers than bailed these banks out of trouble at the height of the financial crisis.

The article goes on to say that banks argue that creating documents long after the fact -- in some cases going to back to 2005 or 2006 -- is routine. That it "memorializes" documents that should have been signed back then. When banks sell bundles of mortgages to investors, called securitizations, they are supposed to be delivered to a trust within 60 days of the closing date. And they are supposed to include all relevant documents, including the promissory note and other mortgage assignments showing transfers from one lender to another.

Yet many banks failed to properly document these transactions and many cannot prove who actually owns a Modesto homeowner's house. This is a key avenue for defending a foreclosure because the bank has the burden to prove such facts.

The report also discovered that some officials signed documents on behalf of companies that no longer exist while working for another company. Some bank officials have been signing documents on behalf of companies that did work years ago but are now defunct.

The whole process is a mess. And while attorneys can fight this process and attempt to help a homeowner stay in their home, it's no guarantee. It's obvious how powerful the banks are. They have done this for years and even after getting caught, they still continue to do it.

Filing for Chapter 7 Bankruptcy in Modesto, however, takes a different approach. Instead of trying to fight a foreclosure, bankruptcy stops foreclosure immediately. Creditors stop calling and hounding and banks can't take your home while the process is ongoing. It is designed to help people start over and that can include keeping them in their home despite financial struggles.

Continue reading "Banks Still Using Robo-Signed Documents in Modesto Foreclosures" »

The Homeownership Preservation Foundation recently reported that California accounts for almost 25 percent of all the foreclosure rescue scams out there that aim to victimize distressed borrowers.

One of the best ways to potentially save your house from foreclosure in Modesto is filing for Chapter 13 bankruptcy. Modesto Bankruptcy Lawyers have seen many people who fall into traps that sound too good to be true to save their homes. Bankruptcy laws are designed to help people who have fallen on hard times and need the consumer protections afforded by bankruptcy to regain solid financial footing.

According to The Homeownership Preservation Foundation, a non-profit group that aims to help homeowners who are struggling, California callers totaled 22 percent of the calls to the group's hotline for homeowners victimized by a foreclosure rescue scam. Beyond California, Florida came in with 7 percent of calls. Los Angeles ranked in the top five of cities nationwide, showing that the problem stretches statewide, including in Modesto.

Homeowners should understand that the Federal Trade Commission in February issued a rule prohibiting the payment of fees upfront for a company to negotiate a reduction in mortgage payments. Companies still openly ask for fees with an average of nearly $2,600 to modify a mortgage. In many cases, no work is done and the money is lost.

Stopping foreclosure can be as easy as making the decision to file for Chapter 13 bankruptcy in Modesto. But before making that decision, you should consult with Modesto Bankruptcy Lawyers to decide if that's your best option.

What Chapter 13 bankruptcy filing allows people to do is keep big assets, such as houses, while still enjoying protection from creditors. Filing for bankruptcy immediately halts the foreclosure process and alerts creditors they must back off. And you can continue to live in your home during the process.

The purpose of Chapter 13 bankruptcy is to come up with a payment plan that lasts several years to satisfy your debts.

Bankruptcy is designed to help people get back on track financially. And if you're considering filing for bankruptcy, don't feel like you're alone.

According to the American Bankruptcy Institute, more than 353,000 Americans filed for bankruptcy in the first quarter of 2011. More than 101,000 filed for Chapter 13 bankruptcy to protect their home from foreclosure or because they make too much to qualify for Chapter 7 bankruptcy. In the last three years, bankruptcy filings have increased from about 1.1 to 1.5 million per year.

Continue reading "California Tops Nation in Foreclosure Rescue Scams; Protect Your Modesto Home" »

When housing prices were up in the mid 2000s, homeowners often hedged their home values against the market to take out home equity loans or lines of credit (HELOCs) in order to pay for various expenses. Some homeowners wisely invested the money back into their homes, making value-added improvements and needed repairs. Others unwisely spent the money on cars, credit cards and other items that would soon depreciate in value.

Now, with the housing market digging out of a major slump nationwide, homeowners are defaulting on home equity loans in record numbers. According to a recent article in the NY Times, lenders wrote off $11.1 billion dollars in uncollectible home equity loans and $19.9 billion in HELOCs in 2009, more than even primary mortgage loans that same year.

Struggling borrowers are contending with not only not being able to afford to repay the loans, but also having far lower home values than when they initially purchased. Lenders are trying to recover money where they can, but many banks are simply writing off losses because so many people can't afford to pay. Buyers, on the other hand, defend their inability to pay, citing that many banks engaged in practices that were unfair to homebuyers, including predatory lending and indiscriminate loan approval for unqualified buyers.

The delinquency rate in the first quarter of 2010 was 4.12 percent, slightly down from the fourth quarter of 2009 (which marked the highest in 26 years). If you are a part of the thousands of Americans struggling to pay back a home equity loan or line of credit, you can work with a Modesto bankruptcy lawyer to settle your accounts.

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.

Although Modesto area foreclosure rates dropped by 3% in May 2010, this area continues to have one of the highest foreclosure concentrations in the nation. With many factories and companies in Central and Northern California closing their doors, the Central Valley is still being hit hard by the economic and housing crisis that began back in 2007.

According to the Modesto Bee, the three-county region including Stanislaus, Merced and San Joaquin counties continues to have the highest percentage of defaulted mortgages in California. Nearly 52,000 homes in these three counties alone have been foreclosed upon since the housing crisis began three years ago. This accounts for nearly 13% of all houses and condos in Stanislaus County, 15.5% in Merced County and 14% in San Joaquin County.

Bankruptcy Can Help Save Your Home From Foreclosure
With the help of a professional bankruptcy attorney, you may be able to save your home from foreclosure by filing for Chapter 7 or Chapter 13 bankruptcy. Since bankruptcy rules and laws are constantly changing, it is imperative that you have a reputable lawyer on your side to help you file all the necessary paperwork required by the federal government.

There are many services out there that promise refinancing and loan modification options that sound appealing, but only a lawyer can truly review your financial situation to recommend a viable course of action. What's more, if you try to file the paperwork yourself, you could end up disqualifying yourself from any type of bankruptcy relief.

On May 21, 2010, the Modesto Bee reported that homeowners from seven Stanislaus County cities, including Modesto, were victimized in a multimillion-dollar loan modification scheme that promised to pull underwater owners out of imminent foreclosure. Instead, the operation simply robbed residents of as much as $5,000, never fulfilling the promise of loan modification.

The scheme was known by several names, including Mason Capital Group, LLC and Gretchen Fox and Associates. It was run out of a boiler room in Southern California by a dozen or so representatives who promised homeowners that, for a fee of several thousand dollars, they could modify their current loans to keep their houses out of foreclosure. In all, nine men were arrested on 97 charges of grand theft, unlawful foreclosure consulting, tax evasion and conspiracy.

Attorney General Jerry Brown said that the men bilked some 1,500 Californians out of more than $2.3 million, many of whom resided in Modesto and surrounding cities. In many cases, not only were homeowners denied the promised loan modifications, but they also lost their homes and accrued additional debt after paying the scammers.

Brown's office began investigating the scheme in 2009 after a number of consumer complaints. Reports indicate that many of the company's high rollers were using their ill-gotten gains to pay for private school tuition, travel, entertainment, shopping and lavish personal expenses. The Attorney General's office will seek restitution for the victims.

If you are facing foreclosure on your home, consider hiring a reputable bankruptcy attorney in Modesto. Don't rely on fly-by-night scams--if it seems too good to be true, it probably is. A lawyer will follow the letter of the law to help you save your home and rebuild your credit after financial hardship.

According to Lita Epstein of HousingWatch.com, Modesto-area homeowners are one of the hardest hit groups of the American population when it comes to negative equity in their homes. Her May 11, 2010 article cites CoreLogic's recent study of homeownership across more than 47 million homes, in which Modesto ranks as the #4 city with the highest number of underwater borrowers in the U.S (62 percent).

When coupled with unemployment or underemployment, being underwater, or owing more than your home is worth, is forcing many homeowners in Modesto and surrounding areas to consider Chapter 7 bankruptcy. Chapter 7, or total, bankruptcy allows your unsecured debts to be forgiven so that you can gain a fresh financial start. In some cases, you can even save your home.

CoreLogic estimates that the average underwater borrower will need another 10 to 20 years to make up for negative equity. Unfortunately, for many people, they just don't have the resources needed to stay in their homes for that length of time. This is why bankruptcy rates have been steadily rising in the Modesto area since 2007. Although bankruptcy can stay on your credit history for up to 10 years, it is also not considered as heavily as it once was by creditors. As a matter of fact, some filers find that they are able to apply for new lines of credit almost immediately after filing for Chapter 7.

Chapter 7 bankruptcy is strictly regulated by the government, and several steps must be completed before you can be approved and your debts can be wiped clean. A Modesto bankruptcy lawyer can walk you through the process to ensure a speedy and efficient solution to your financial problems.

If you're facing foreclosure on your Modesto home, you might be intrigued by offers that claim to be able to "save your home quickly" or "stop foreclosure now." You may have seen or even responded to newspaper ads, flyers or Internet ads that promise to get you out of debt fast without filing for bankruptcy or that claim to be able to file your bankruptcy without affecting your credit score. While there are legitimate credit counseling services that offer foreclosure assistance, there are no magic "genie lamp" services that can simply wish away your foreclosure situation.

The Better Business Bureau (BBB) and Department of Justice (DOJ) work together to educate homeowners on bankruptcy foreclosure scams around the country. Both agencies post known scams and warn consumers that scam artists will often target specific religious or ethnic groups with flyers offering homeowners quick fixes to mortgage problems.

The BBB reports that one of the most common scams involves companies telling homeowners that they can deal directly with their lender to stop foreclosure. Then, they ask the homeowners to make mortgage payments directly to their company instead of to the bank. Instead of making the payments for you or talking to your lender, though, they will just take the money and run. More scandalous con artists will even ask for the property deed or title to your home so that they can file bankruptcy in your name without your knowledge. While this will temporarily stop foreclosure, it only allows them enough time to skip town with all your money before you realize what's happened.

Look for Signs
The BBB and DOJ suggest that you proceed with caution when you come across services that:
- Have titles such as "mortgage consultant" or "foreclosure service"
- Contact you only when your home is listed for foreclosure
- Ask for a fee before providing services
- Direct you to make payments directly to them instead of your lender
- Make you sign over your property deed or title

Your best bet is to hire a reputable bankruptcy lawyer in Modesto who can take you through the bankruptcy filing process using the proper legal procedure. If something sounds too good to be true, it probably is.