Facing Foreclosure: Suing Your Mortgage Lender vs. Filing Bankruptcy

Thinking About Suing Your Mortgage Lender or Filing Bankruptcy?

As we face a possible third year in this recession (which is officially over if you believe some politicians and economists) many homeowners are still struggling to keep their homes out of foreclosure. Many of them are using controversial tactics such as filing a lawsuit against the mortgage lender in an effort to delay or stop the foreclosure process or at least force the mortgage company to the negotiating table.

Homeowners looking to avoid foreclosure via the courts often sue the mortgage lender and challenge their right to actually take ownership of the home. And while some homeowners with legitimate gripes have won in the courts, an even greater number have gone on to lose their home to foreclosure anyway. Nevertheless, many housing advocates are promoting the lawsuit approach for homeowners facing foreclosure; but is this trend the right approach to what seems to be an ongoing problem? Well it depends on who is facing the foreclosure.

For the homeowner who has a legitimate claim against a mortgage company who is fraudulently trying to use foreclosure to seize their home, yes, filing a lawsuit is a smart move. But if a homeowner is simply attempting to circumvent the foreclosure process by sending the mortgage company on a “wild goose chase” through the courts, then their strategy could backfire. Not only could they succumb to foreclosure anyway, they will also be stuck with the legal fees.

Homeowners Facing Foreclosure May Need to Consider Bankruptcy

Homeowners facing foreclosure should definitely look at their mortgage to see if there is any fraudulent activity on the part of the servicer; but they should also take an honest look at their total financial picture. If they have other financial problems, they may want to seriously consider bankruptcy. Not only will bankruptcy help them avoid foreclosure; but it will also discharge unsecured debts such as credit card bills and give them the opportunity to get a financial fresh start on all aspects of their finances, not just their mortgage.

If you would like to set up a free consultation with one of our bankruptcy attorneys, don’t hesitate to contact us today.