Hello everyone and thank you so much for joining us for This Needs To Be Said. Our friend, Attorney Bob Doig, is joining us today to talk about foreclosure and bankruptcy, two words I wasn’t too sure went together until we’re about to have this conversation on today. Welcome back to This Needs To Be Said Attorney Doig. How are you?

I’m fine, Katherine, thanks, and how are you?

I’m doing well.

Great.

Help me solve this mystery in my mind because it just doesn’t seem like those two words go together, foreclosure and bankruptcy.

Okay. What happens is if a person has a mortgage and for some reason they’re unable to make the payments, typically what will happen is that the mortgage company will file a foreclosure. In Colorado, that means they’re going to file it with the public trustee of the county where the property is located. Once that happens, the homeowner has a number of different options that they can pursue. Frankly, it’s going to depend on whether they want to keep the house or not. Two of those options involve filing bankruptcy, either Chapter 7 or Chapter 13. Now, we can go through all of the options. Typically this is what I do if someone calls me and they’ve had a foreclosure filed against their house.

The first thing I will ask them is, “Well, how do you feel about the house? Do you want to keep it or not?” Sometimes they’re like, “No, we’ve had enough of this place”, or maybe, “We’ll never be able to catch up with these payments no matter what.” In which case the options are going to be different. I could go through all of the options with you. I’ll try to keep it short so that we’re not on the phone for the next half hour or whatever.

I’m sure it could get pretty detailed but as much as you can, and I know no one size fits all in this scenario. A person definitely would need to talk with you about their individual situation. You said something that I really like and I want the audience to pay attention to, you go through these options with them. You’re not just signing them up for bankruptcy. You’re going through asking them some probing questions so I really like that approach and I don’t know if you had it crafted that way. Maybe you did but when I think of attorney and I think of bankruptcy, I don’t necessarily think of someone helping me to have options. That is very refreshing, Attorney Doig. I just want to say thank you for that approach and I’m sure that all of your clients appreciate that as well.

Ultimately, Katherine, you want to do what’s right for the client and if it involves filing bankruptcy, fine. If it doesn’t involve filing a bankruptcy, that’s okay too. For me the ultimate thing that I’m looking for is to help people get to a better place down the road from where they are when they call in. Why don’t I just go through the options? What the heck.

Absolutely.

It’s always an option for them to just do nothing. If they either don’t want to live in the house anymore or they are absolutely unhappy with it or whatever, if they just do nothing, ultimately the foreclosure sale will happen and either the mortgage lender or some investor will win the auction and ultimately the people will be evicted from the house if they don’t move voluntarily, so that’s an option.

If they want to make that quicker and they’re certain that they don’t want to live in the house anymore, they can talk to the lender about giving the property back to the lender and that’s called a deed in lieu of foreclosure and sometimes lenders are willing to do that. It short-circuits the foreclosure process so it can happen much quicker. It ends up saving the lender some money and the homeowners are on their way quicker than waiting the four months for the foreclosure to be completed.

A third option if they don’t want to live in the property anymore is to put the property on the market and try and sell it. If they have some equity in the house, this could work out great because they’ll end up leaving the closing with some money in their pocket. If they don’t have any equity, sometimes the lenders will allow a short sale and that way the property gets sold, the people move and their lives aren’t disrupted as much as they would be otherwise.

Now, if they want to keep the property, they have a few options also. Number one, they can make up the back payments. Just find out how much it would cost to bring the mortgage loan up to date and if they have a source to come up with that money, they can pay that over to the lender. If they do that, the lender is going to withdraw the foreclosure case against them. Secondly, they could try and work out a forbearance agreement or a modification of their loan. I’ve had clients who have been able to do that.

If the reason they missed their payments was maybe due to medical bills or inability to work and now their situation is better and they’re going to be able to make the payments, sometimes the lenders will take that into consideration and modify the loan to allow them to stay in the house and that works out great. Other than those two things, the other two methods to deal with a foreclosure are in the bankruptcy court. There’s a Chapter 7 bankruptcy and a Chapter 13 bankruptcy. With the Chapter 13 bankruptcy, the people can catch up on the payments that they’ve missed by paying them back through the Chapter 13 trustee and that way they can end up keeping the house. At the end of their Chapter 13 case, they’ll be up to date and life goes on. All’s well. No problems.

If the people need to stay in the house for a short period of time or even a few months, say the kids are in school and they don’t want their school year to be disrupted, they could file a Chapter 7 bankruptcy that would stop the foreclosure. Ultimately with a Chapter 7 bankruptcy the foreclosure is going to go through but it’s going to be delayed because of the filing of the Chapter 7 bankruptcy. I’ve had clients file Chapter 7’s and be able to stay in their house for an additional, up to a year after the bankruptcy case was filed. That’s basically it. I’m not aware of any other options people might have dealing with a foreclosure but that pretty much sums it up, Katherine. Do you have any questions for me?

I just want to summarize this because you went through, was it four different options, three or four different options there? This is something that makes someone think about their situation in a more rational manner. I’m thinking of the time that I filed foreclosure on my home and it’s been years ago, I was a nervous wreck. Going into an attorney’s office was not the thing that I thought I could afford. It wasn’t the thing that I thought I wanted to do. Even talking with my mortgage company, it was nerve-racking so you sitting down in a calm manner with someone like myself who is on the edge of their nerves, it helps me to understand like how invested am I? The first thing you asked was, “How do you feel about the house?”

We get really attached to our things. You took me in that space and you gave me options so it sounds like you understand really where we are. You’re walking a moment in my shoes to help me. I don’t have a questions as much as I have that comment to say this should help people to understand Attorney Doig is not just out to get me. He’s here to help me, really help me to understand I can make the best possible decision for me and my family and my things at this time. It doesn’t sound or feel pressurized with how you presented it while I’m listening to you share these options.

The other thing I’d like to comment on is the fact that there are options. There are options, it’s not just one straight line to foreclosure or one straight line to bankruptcy. There is some thinking space in between there. However, we do not recommend them to try to do this on their own because there may be some steps that they miss. With that being said Attorney Doig, how do they get in touch with you outside of This Needs To Be Said?

Okay. You know, if anybody wants to give me a call to discuss this, I’d be happy to do that. I can be reached at area code 719, 428-3339. Again, that’s 719-428-3339. If they just call, I’d be happy to discuss their situation with them and explore all their options and answer any questions they might have and I’d be happy to do that.

Awesome. I want to say thank you so much for stopping by This Needs To Be Said and sharing your knowledge with us on today. Have a wonderful day Attorney Doig.

Okay. Thank you Katherine. You too.