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Many who were foreclosed upon may be entitle to debt relief

For many people across the country, including California residents who recently went through the foreclosure process, they may be getting some unexpected help soon. The debt relief comes in the form of a payment because of the fraud the banks committed when attempting to foreclose on homes back in 2009 through 2010.

Starting sometime this April, some payments may be sent out for those people were foreclosed upon during 2009 and 2010, particularly if there was a significant amount of fraud or wrongdoing in the case. The payments themselves will range from anywhere from hundreds of dollars up to $125,000. Further, it is important to know that by accepting these payments, those who suffered through the foreclosures are not waiving their right to sue the banks or servicers at a later time. Any borrowers who are eligible for the payments will likely be getting a letter in the next few weeks and some may have already received a letter. Tax information may be required in order to collect some payments.

While these payments are certainly welcomed, for many they may be too little too late. For those who have already lost their homes to these fraudulent foreclosures, there's no promise whatsoever that the homes could be recovered. If anything, many of these consumers are likely still in debt and still need other debt relief.

One of the ways to gain more debt relief is to file for bankruptcy. Bankruptcy can be used to eliminate debt, particularly credit cards or medical debt and, if the foreclosure is still in the works, it could be used to prevent foreclosure.

For those people still facing financial challenges, any form of payment is good news. However, it may not be enough for those who are still struggling and other options may need to be considered.

Source: U-T San Diego, "Are you due a foreclosure payment?," Lil Leung, March 28, 2013

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Kenneth C. Rannick, P.C.
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