The downturn in the economy is building the bridge between loan modification and bankruptcy.

More and more people facing foreclosure feel they are running out of options and are turning to bankruptcy as the solution to their financial crisis. Various hardships have forced them to extend themselves on credit cards and personal lines of credit to get the cash they need to pay their mortgage. After topping out all available cash they find themselves barely staying above water in the pool of monthly overhead they have immersed themselves in. The low blow comes when their lender tells them that they are not qualified for a loan modification because of their significant debt obligations. Due to the obligations the lender feels the homeowner can not afford to keep their home. This must comes as a shock to the homeowners who have overextended themselves on credit as a desperate attempt to keep their home. Due to the large number of homes in default lenders are not as quick to foreclose, but they will get around to it, and what option does the homeowner have left that will stop foreclosure and stop the collection calls? The answer is often bankruptcy.

What does that mean for you? Even if you are facing an impending sale date or have given up all hope, call First Source Law. Our experienced attorneys can help devise a strategy to keep you in your home, get rid of debt and have a fresh start.

How your principal balance plays a role in qualifying for a payment at 31% of your gross income.

So we have all heard over and over that through loan modification they modify your mortgage payment to 31% of your gross income. I have seen many posts recently from confused homeowners who applied for a loan modification and were not offered a payment of 31% of their gross income or were just denied. There is a key factor in determining what your modified payment should be and whether you can qualify for a payment at 31% of your gross income and that factor is your principal balance. Let me take you through an example:
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IndyMac Making Home Affordable Step Rate Sample

Upon successful completion of their trial period payments our client was offered a permanent modification with the terms listed below.

Principal Balance: $578,311.19

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First Source Law Featured in The Faster Times

First Source Law attorney Benjamin Yrungaray was recently quoted in an article on debt settlement and bankruptcy in The Faster Times. Speaking about benefits of debt settlement, Mr. Yrungaray stated “You can settle a debt for a fraction of the original debt [under debt settlement], despite being legally obligated for the whole amount. For many people, this means avoiding bankruptcy.” Check out the article when you get a chance.

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