While the nation has been enjoying some recovery from the great recession, that does not mean that some Ohio residents do not continue to struggle financially. Even out of what felt like a firestorm in the mortgage crisis that accompanied the recession, homeowners facing a debt crisis may look to bankruptcy to help them out. Both creditors and debtors in situations like this may need help to look out for their interests.
One option that some homeowners may pursue is a modification of their mortgages. This generally requires them to work with the banks directly. However, a program rolled out in New York may provide a good example that other regions may want to adopt. It involves rolling modification efforts into the bankruptcy process more closely. It also gives mortgage lenders the ability to more actively work with their debtors in this effort because such efforts are not in violation of the automatic stay that generally accompanies a bankruptcy filing.
Other states have also used a mediation path in the context of bankruptcy. In Florida, this has even involved professional mediators. In New York, the effort resulted in roughly half of cases initiated in 2011 and 2012 being modified. Successful modifications not only help people keep their homes but help lenders to be paid appropriately.
Ohioans who would like to learn more about how mortgage modification and bankruptcy may work together might find it helpful to discuss their situation with an experienced attorney. This may allow them to understand all of the legal ramifications involved in these processes.
Source: Bloomberg BNA, “Bankruptcy Court’s Mortgage Mediation Program a Success,” Daniel Gill, Feb. 24, 2017