Foreclosure abuse settlement just one way Tennesseans may save homes

The Great Recession was brought about in part by the housing market collapse. Big lenders engaging in irresponsible and predatory mortgage schemes bore a great deal of the blame. In 2012, a multistate executive committee worked out a settlement with the five largest mortgage providers in the nation: Citi, Wells Fargo, Bank of America, JP Morgan Chase and GMAC/Ally Financial. The multibillion dollar settlement was agreed upon by the banks and 49 state attorneys general.

In March of 2014, the banks finally satisfied their obligations to Tennessee homeowners under the settlement. The funds provided by the settlement are meant to help struggling homeowners avoid foreclosure. Of course, one cannot always rely on big banks to rectify the problems they created, and there are other legal options to prevent foreclosure for those homeowners who are not being helped by the settlement or for whom the settlement funds do not provide adequate relief. Chapter 13 bankruptcy is one of those options.

Thousands in Tennessee benefit from settlement

In total, Tennessee's portion of the settlement was an estimated $240 million. Most of the funds - $180 million - were earmarked to help homeowners lower mortgage payments, avoid foreclosure or escape from underwater mortgages.

The $180 million has been used to approve short sales, refinance loans and, in some cases, reduce principal amounts. According to a March press release issued by the Tennessee Attorney General's Office, all banks have now satisfied their obligations to consumers within the state under the National Mortgage Settlement.

At least 4,000 Tennesseans received some form of assistance pursuant to the settlement. The average benefit for Tennessee residents who received a portion of the settlement was estimated to be approximately $40,000.

Explore Chapter 13 and other ways to save your home with a bankruptcy lawyers near me

If you were among those who received assistance from the National Mortgage Settlement, it could help to make up for the abusive practices lenders subjected you to. But, if the settlement is not enough to save your home, or if you did not receive assistance from the settlement at all, you may have to pursue other options.

When it comes to saving your home from foreclosure, Chapter 13 bankruptcy can be an incredibly useful tool. Chapter 13 can stop foreclosure and get you back on track with your mortgage payments.

When you file for Chapter 13 bankruptcy, a legal instrument known as an automatic stay goes into effect. An automatic stay halts creditor action, including foreclosure, giving you time to make a plan.

After filing for Chapter 13, you and your attorney will devise a repayment plan that spans a three to five year term. Over the course of the plan, debts will be consolidated and your payments may even be lowered. At the end of the term, most types of remaining unsecured debt are discharged completely, meaning many Chapter 13 filers only pay pennies on the dollar to eliminate these debts.

To keep your home through Chapter 13 bankruptcy, you must keep up with mortgage payments during the course of your repayment plan, and your plan must also account for past due mortgage obligations. Assuming you live up to the terms of your plan, the foreclosure action will be defeated.

For the bank, a house is simply a valuable piece of property securing a loan, but to you, a home is so much more. Chapter 13 can be one way to save your home. To discuss Chapter 13 bankruptcy and to explore other potential options, get in touch with a Tennessee bankruptcy attorney today.