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"I
don't know what to do except file bankruptcy," says
Lauren McKenzie of Portland, Oregon.
Caught with one
of those bad mortgages, Lauren’s monthly house payment
has shot up 31% (from $3,000 to $3,930) and she’s
missed two payments.
“This
is outrageous…I am sick to my stomach...and
I have no idea what to do!” states McKenzie.
McKenzie cannot afford her
out-of-friggin-control house payment.
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Lauren's
consumer credit counselor warns against filing bankruptcy,
suggesting "BK" should be used as a last resort.
For Most
People, Bankruptcy
Is Not The New Beginning
They Think It Will Be!
Lauren sees no alternative, and she
is aware of the new bankruptcy laws (in effect October 2005).
“This seems to be the last resort for me,” Lauren
admits. “The clock is ticking…they (mortgage
lender) have accelerated the loan (Acceleration Clause in
mortgage).”
Before filing for bankruptcy protection, she knows she must
attend mandatory credit-counseling sessions
held by designated groups throughout the country.
New
Bankruptcy Laws Eliminate
Last Hope For Some People….
Under this new law getting your
debts cancelled is more difficult! For some people, getting
debts canceled will be impossible. And you can thank the
credit card issuers for the more stringent laws.
For Lauren, her counselor will recommend a Chapter
13, which immediately halts a foreclosure
sale and freezes all collection actions for debts that
predated the bankruptcy filing.
The court then approves a repayment plan that determines
which creditors get paid back and when.
Under that arrangement, she will have up to
five years to pay missed mortgage payments,
essentially forcing the lender into a repayment plan and
forcing a time frame that most lenders would not otherwise
accept.
But while trying to make good on past debt, Lauren must
keep up with her regular mortgage payments and other living
expenses. Can Lauren afford these increased mortgage payments?
From bad to worse, Lauren’s home probably is not
worth what she paid for it…she probably owes more
than it is worth. Should she continue making payments
on a house she cannot afford?
These are the kind of painful decisions Lauren will need
to make.
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When
you go through this mess, you start to look
forward to the end, no matter how bad it is…you
just want it to be over….
