Finally the rules regarding mortgage services practices are set to change, and the new rules may go a long way in benefiting homeowners struggling with their mortgage payments. The Consumer Financial Protection Bureau's rules will force banks to take an active role in informing borrowers about their loan and provide them with greater protection if they find themselves in distress.
The rules may provide some relief for Arizona homeowners considering bankruptcy to alleviate their financial burden. Some homeowners may not be aware that bankruptcy not only wipes out most of their debt, but also puts an automatic stay on foreclosure proceedings. For those who have assets they wish to keep or an income that is steady but not enough to make ends meet, Chapter 13 may be an option they wish to explore.
Under Chapter 13 bankruptcy, the court analyzes a filer's income and works out a repayment plan based on that income.
The new rules may also go a long way to ease homeowner's stress when it comes to mortgage payments by requiring banks to enact a three-month delinquency period before enacting foreclosure proceedings and precluding foreclosures while loans are being modified.
They also ensure lenders will be aware as to what happened to their money and will receive assistance from the relevant agencies when it is required.
However, mortgage payments may not be the only form of debt weighing Arizona residents down--unexpected and sudden expenses such as illnesses or loss of job are also factors that affect the ability to get out from under debt. Those Arizona residents should consider filing for bankruptcy to ease their burden and begin their financial life anew.
Source: UT San Diego, "How will new mortgage rules affect borrowers?," Lily Leung, Jan. 26, 2013
