There have been times when the federal government has extended a helping hand to those who have been struggling to pay for their mortgage loans. There are few options available to homeowners who are struggling with debt and fear that it may cost them their homes altogether. However, filing a bankruptcy petition under Chapter 7 is one way to overcome financial challenges and have a fresh financial start.
The federal government’s efforts to provide debt relief a few years back may not have been as successful as many Maryland homeowners had initially believed. A recent rise in the mortgage interest rate may cause many of them to default again and face the possibility of foreclosure. This can have an adverse impact on both the housing market as well as on the overall growth of the economy.
The federal program, which included lowering interest rates for a specific period of time for certain borrowers who qualified for the plan, had been based on the assumption that the economy and housing market would recover during that period. Unfortunately, the recovery has not been strong enough for many of those in the program and they will be unable to cope with the new higher interest rates. The margin between the amount of their unpaid loan and the value of their properties makes it difficult for these homeowners to seek refinancing or mortgage modification. Maryland is one of the states wherein the monthly median payment for these borrowers is likely to face a steep rise, amounting to over a thousand dollars for some.
Given the difficulties these borrowers face at present and the looming possibility of creditor harassment once they default on their payments, some may be better off seeking debt relief through Chapter 7 bankruptcy instead of hoping for additional relief from the government. However, this may require homeowners to get more information regarding the legal procedures involved in such a bankruptcy filing by speaking to a College Park Maryland bankruptcy court lawyer.
Source: The Washington Post, “With clock ticking on mortgage relief, homeowners wonder what’s ahead,” Dina ElBoghdady, March 11, 2014