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Do not lose your house!

By James K. Ince, Attorney at Law, Contributing Columnist

I was recently handed an article about the new bankruptcy laws and how they likely succeeded in ways that the creditors never anticipated. Obviously, the creditors did not read the legislation nor did they ask their own attorneys what it meant! It seems that they are shocked to find out that while people are making payments on their credit cards they fail to pay mortgages. Of course, this affects the bottom line of lenders far more than the insignificant write-off they had to make with the credit card debts.

I find this whole scenario very sad. When mortgage companies talk about foreclosures, they discuss the impact on their balance sheets and the ''problem'' with disposing of the glut of houses now in their portfolio. What is never discussed in these corporate board rooms is the tremendous loss to a family when they lose their homes. First, there is the emotional impact that hits prior to the loss of the home. Very often individuals feel that they are somehow failing when events beyond their control impact finances. I know because it has happened to me. In less than seven years I have adopted a child, had a major house fire, a tornado, hail storm, major medical catastrophe and the ever increasing cost of life itself. That adds a huge stress without even having to consider losing my house. Luckily for me, I have been able to ride those catastrophes somewhat intact. Many, many are not so lucky.

The major difference between corporations and individuals is that individuals tend to react emotionally. Therefore, when the credit card company begins to call four and five times a day because the individual is behind on the credit card, the individual just wants it to stop. Often, they are lied to. The biggest lie now is that they are told they just need to pay it because bankruptcy does not exist any more and they have no choice. While this is completely false, many people believe it to be true. So, they write the check. After all, they have not heard from the car or house creditor so it must be safe not to make those payments. This is how it happens. Very often the first communication from the creditor of a house or car loan is very serious. With a car, it may be waking up one morning and finding out the car was towed in the middle of the night. I get calls all the time from individuals who mistakenly believe the law requires that they be notified prior to the repossession of the vehicle. There is no such law. While mortgage companies are more regulated, often the first communication is an acceleration letter. Basically, it makes the entire loan due immediately. Either of these scenarios usually results in a bankruptcy.

The best advice I can give is that an individual should NEVER, NEVER NEVER NEVER (did I mention Never?) pay a credit card instead of a car payment or house payment. It is foolish to take a chance on losing your house or car because of stress created by collectors. If you do find yourself in this situation, then the very first thing you should do is get the payments caught up immediately. If you cannot, please call a bankruptcy attorney BEFORE you lose the property. There is so much that can be done. All too often I get to visit with people who thought there was nothing that could be done and we are simply mopping up the mess after they lose the property. Please know that despite the lies you have been told, bankruptcy is alive and is helping thousands of people a year get back on their feet without losing the property they have fought so hard to protect.