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Large settlement may bring foreclosure relief

During these difficult economic times, many people in Cleveland, Tennessee, have found themselves facing serious financial challenges, up to and including foreclosure. Filing for Chapter 13 bankruptcy can provide some relief from the pressure of creditors and may even buy homeowners the time needed to keep them in their homes.

Under Chapter 13, the filer states a desire to repay debts, although a temporary lack of income prevents that at the moment. Debts are evaluated against assets, and a percentage of income is placed into escrow, from which a trustee pays creditors. This stops collection processes, which may buy you time to investigate all available options to prevent the foreclosure.

For example, some Tennessee homeowners facing foreclosure could find relief in a recent $8.5 billion settlement announced by the Federal Reserve and the Office of the Comptroller of the Currency. The settlement comes in compensation for improper mortgage and foreclosure practices by 10 of the largest mortgage servicers in the country. As many as 3.8 million homeowners nationwide could receive help by the end of March, including many people in Tennessee.

The settlement includes $3.3 billion in cash payments and $5.2 billion in other assistance, such as forgiveness of judgments or loan modifications. Homeowners could receive anywhere from a few hundred dollars to $125,000, based on any errors made in the mortgage and foreclosure processes.

The settlement will also simplify the foreclosure review process for many homeowners. There will no longer be a long, drawn-out case-by-case review. Instead, those affected will be contacted by late March with the details of the compensation due them.

Tennessee homeowners may be relieved to know that help may be on the way. Financial hardship can happen to anyone at any time. However, there are ways to reduce the burden of difficult economic times. One possible way is by filing for Chapter 13 bankruptcy.

Source: WSMV.com, "Borrowers to get $8.5 billion in foreclosure and mortgage settlement," Kara Johnson, Jan. 10, 2013

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