There are a number non-profit organizations in Metro-Boston (and state wide) that provide mortgage and foreclosure assistance to homeowners facing foreclosure. Over the last several months, I have personally encountered situations where these (for lack of a better term) foreclosure prevention counselors have actually caused more harm than good (or at least have the potential to). Consumers seeking assistance of these non-profits need to be aware of a few things.
Firstly, they are not lawyers. They cannot provide legal advice. If any of these counselors tell you to do something that involves invoking a legal right – such as filing a bankruptcy petition – then you should seek the advice of an attorney.
I had a client who was told by a foreclosure prevention counselor to “just go down to the court and file bankruptcy so you can get the [automatic] stay” so that a foreclosure auction could be avoided. The problem is the client did not have a credit counseling certificate, and had no clue about the consequences of filing the case without proper preparation. His case was dismissed. In addition, had the counselor been properly trained, the counselor would have known that this individual needed bankruptcy from the get-go, not the services of the non-profit.
“Just go down ….and get the stay.”
The whole concept of “just go down and get the stay” vexes me. When you’re filing bankruptcy, it’s an important and significant legal action with potentially long term consequences. You’re not going to the grocery store and picking up a loaf of bread, a gallon of milk, a pound of salami and the “automatic stay.”
Secondly, and perhaps most importantly, the counselors have no training or understanding of bankruptcy and how it works. Many bankruptcy attorneys – like me – study, write, educate while we also continue our legal education by attending to and speaking at conferences. Mortgage counselors don’t – unless they are bankruptcy lawyers – which in my experiences they have not been. This brings up my second troubling encounter with a mortgage counselor.
I received a call from a prospective client approximately two weeks ago who told me she was working with a non-profit. Generally, the only thing I can get from a telephone consult is whether I believe there is anything I can do to help the caller. This caller had a number of issues – not just the possibility of foreclosure, but also other non-mortgage debt issues. I provided a list of information that I needed for a meaningful in-office consultation and invited the caller to get back to me when she had her documents and information and was ready to meet. At the end of the conference, she asked me to speak with her counselor – which I refused without (1) being retained (since I had no information to go on) and (2) having a written authorization from her to do so.
About a week later, I received a call from the foreclosure prevention counselors. She told me she was working with the client, and was “negotiating” with the mortgage company. She wanted to know how “bankruptcy” could help the client and if I could explain bankruptcy to her so as to help her “strategize” the negotiations, or words to that effect. My first thought was ‘you have to be kidding me.’
I told the “counselor” that I had not been retained (and knew nothing of the case) and I had no written authorization from the prospective client. She then said “ok then, hypothetically how could a bankruptcy filing help this person.” This time, I actually wanted to say “you’ve got to be kidding me.”
There was little I could do to hide my consternation. With a tone that I am sure came across as sarcasm, my response was: “hypothetically, I do not have a written authorization to speak to you, and I have not been retained as her counsel.” I also essentially said that unless she was a lawyer, she wasn’t qualified to determine how a “bankruptcy” filing could help this person. After she presumably determined that she had a better chance of winning the lottery than getting me to help her “strategize”, she hung up the phone.
My comments should not be viewed as my declaring that foreclosure prevention counselors working with non-profits are all bad. Some are providing a valuable service – they are helping distressed homeowners keep their homes, and helping them avoid bankruptcy. But there is no “one size fits all” solution for struggling homeowners, and mortgage foreclosure counselors have no business developing any bankruptcy strategy – unless they are an attorneys.
If you or someone you know is working with a foreclosure prevention counselor, I recommend at the very least meeting with an attorney (not just a phone consultation). Give the attorney all the information they can to let them assess whether bankruptcy is even an option for you…and give the attorney an opportunity to see if they can – or should – work with the mortgage counselor. Then, and only then, can the homeowner determine whether a bankruptcy filing falls into the “strategy” of trying to same the home.
Related posts:
- Free Foreclosure Prevention Workshop
- Before Foreclosure Rescue Scammers Start Knocking…
- “I Can Stop Your Foreclosure!”
- Credit Counseling Predators
- A Warning for Homeowners Facing Foreclosure
Tags: Bankruptcy, foreclosure prevention, Mortgages and Foreclosures
