During the economic recession of 2007 a large number of corporations rush the courts in order to seek bankruptcy protection. On the other hand many individuals primarily those with limited financial resources ended up with overwhelming debt many resulting in foreclosure. In an off the record chitchat with a prominent Miami foreclosure defense attorney during the New Year's celebration I learned that many people who lost their homes did so because they fail to take action against the lender.
While many of federal government foreclosure assistance programs rolled out slow and for many too late, many others who could have taken advantage of programs like the Home Affordable Refinance Program (HARP), the Home Affordable Unemployment Program (UP), and the Home Affordable Foreclosure Alternatives (HAFA) did not by failing to hire a foreclosure defense attorney who could assist them in modifying their loan and or putting a stop to the foreclosure process by seeking protection under the bankruptcy code. As news of toxic loans sold by AIG and others became public information many homeowners found themselves holding a mortgage of substantial more value than what their property was worth. Many who allowed these homes to be repossessed found themselves having to deal with a deficiency judgment afterwards. A deficiency judgment is a type of lawsuit pursue by a lender when the reprocessed foreclosed property is sold for less than what was owe in the original mortgage.
One thing all these people have in common is that they all isolated themselves and ignore letters and communications from the lender. This is never the right thing to do regardless of the type of debt but in the event of a mortgage is important to establish a channel communication with the lenders loss mitigation department immediately. It is just as important to seek the help of an experience bankruptcy attorney. There are many lawyers and law firms that advertise bankruptcy services and while these may be competent and license individuals it is advised you seek the help of a debt relief specialists with litigation experience. You will find that many of these law firms offer free initial consultations and in many cases payment arrangements.
So, back to my original question - What would happen if all of us filed for bankruptcy protection?
According to analysts this ordeal was caused by greedy banks lending money to people who cannot afford what they were purchasing so what if everybody was to seek bankruptcy protection keeping these lenders from reprocessing all the properties they did and sold at a discount price! I think the outcome would have been several failed banks but the impact to consumers would have been less. There were a lot of people who did not participate in this practice or purchase homes during this time but yet have seen their properties depreciated tremendously while many of the banks responsible for this chaos are now 40% to 50% larger and wealthier.
