PROPERTY values of most houses in California have not yet gained momentum. In fact, a lot of homeowners have loans above the current market value of their homes. In real estate parlance, the property is underwater. Nevertheless for many reasons, homeowners choose to keep their property. As such, they are allotting almost half of their income towards their mortgages. Note that many of them have not refinanced or bled their property dry. Hence, through no fault of their own, decent folks have to pay high mortgages in order to keep their home.
In some instances, the finances of the family are further strained because one was laid off or his/her work hours was cut. To sustain the cut in their budget, some turn to credit cards. At first, they do not feel the impact because they can still pay the minimum balance of their credit cards every month. This gives them a false sense of security. It’s definitely hard to adjust one’s lifestyle. Before, they know it, it get’s harder and harder to pay off the debt and bills every month. They juggle paying one credit card with another and just end up with more in debt.
Some even drain their savings and retirement funds to pay for taxes and other unforeseen expenses. I’ve seen clients with many unopened letters and bills as though they are afraid of what’s in there. Always be on top of your finances. Always open your mail. Knowing your problem is better than hiding under all the strain. Many clients only seek the services of attorneys if their situation is desperate, e.g., foreclosure, lawsuit, wage garnishment, etc.
The best time to seek the advice of an attorney is when your financial circumstances have change. Examples of such changes are: your income got lower; your are unable to pay your entire credit card debt; or your mortgage payment is more than 30% of your household income. At this time, your lawyer can act as your financial consultant and give you several options.
As your financial situation gets desperate, your options becomes more limited. For instance, it will be hard to get back a wage garnishment but it is easier to settle your debt with a collection agency. It’s even easier to answer an lawsuit by a credit card company than to fight a default judgment. A default judgment is a final judgment obtained by a creditor because the debtor did not respond to the lawsuit. Many times, the client have no option but to file for bankruptcy. Whereas, had he sought the advice of a lawyer earlier, the debt could have been settled. If some homeowners was able to modify their mortgage loans, such that they will be paying only 30% of their income, then they don’t have to resort to using their credit cards to augment their income.
Bankruptcy is not a solution for everything, but it gives the debtor many reprieves. Please consult a competent lawyer if you have any financial or legal problem.
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If you have any impending foreclosure, please call our office at 213-639-3888 or e-mail us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Our office is located at 3699 Wilshire Boulevard, Suite 720, Los Angeles, California 90010.
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This article does not constitute any legal guarantee or advice for any individual matter and does not create attorney client relationship with the readership.
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