Bankruptcy  doesn't have to end in foreclosure, debt group  hears  Source By David Flaum

(webmaster's note: this study of 50,000+ bankruptcy cases concluded that there is a 70% chance of failure to save your home during the first 12 months of a bankruptcy plan that will last at least 36 month)

Helping people who filed wage earner bankruptcy petitions stay with their repayment plan could help one in 10 of the potential dropouts from losing his home to foreclosure. That was the conclusion of Berje Yacoubian, whose firm, Yacoubian Research, studied bankruptcy and foreclosure trends in Shelby County for the Memphis Credit & Bankruptcy Collaborative. Advertisement The collaborative is a loose confederation of credit counselors, bankers, real estate people, consumer advocates, educators and government workers set up to assess and deal with personal financial issues and education. Yacoubian researchers studied 46,000 Chapter 13 bankruptcy petitions filed by Shelby County residents from 1999 to 2002. Chapter 13 is the part of the bankruptcy code that allows someone to keep his home, car and some other assets while he repays his debt on a schedule filed with the court. The process is designed to take three to five years. "The primary purpose of Chapter 13, if you own property, is to save your house," Yacoubian said. Of the 9,721 petitions filed in 1999, only 584 had been discharged by April 2003, meaning the debtor had completed his program, Yacoubian said. Another 2,462 cases were still open and 6,675 had been dismissed, meaning the person filing them had dropped the ball on the repayment plan, he said. Foreclosure is "the ultimate nightmare" for Chapter 13 filers, Yacoubian said. And about 35 percent of the 15,000 foreclosures in Shelby County since 1999 were filed against people who had petitioned for Chapter 13 bankruptcy protection, he said. At the current pace of Chapter 13 bankruptcy filings, we're likely to see 4,700 foreclosures in Shelby County this year, Yacoubian said. "Foreclosure is really the last step in the process," he said. "Not everyone who files for Chapter 13 and is foreclosed on can be saved. Intervention to counsel homeowners at risk could prevent about 10 percent of the foreclosures." Members of the collaborative have to decide where there are opportunities for financial education to accomplish that, said Beth Dixon, president of The RISE Foundation, a nonprofit group that sponsors the collaborative. Saving 10 percent of Chapter 13 filers homes from foreclosure is possible "if you have the resources," said Ron Roudebush, regional manager of the Consumer Credit Counseling Service of Memphis. Based on the number of households, Chapter 13 bankruptcy is far more common in the "center city" - the 14 Zip Code areas mostly west of Highland - than in the suburbs (the remaining Zip Code sections), Yacoubian's research found. About 19 percent of center city households filed for Chapter 13 from 1999 to 2002 compared to 7.4 percent of suburban households, he said. Foreclosures follow a similar pattern, but the gap is closing, Yacoubian said. The number of foreclosures in the center city was 18 percent higher in 2002 than in 1999, but the suburban figures were up 55 percent. "This is no longer just a center city problem," Yacoubian said. - David Flaum: 529-2330  Copyright, The Commercial Appeal, Memphis, TN. Used with permission. (http://www.commercialappeal.com)

IS YOUR MORTGAGE BALANCE CORRECT?

Of course, lenders have different computer programs.  but normally, when you make a mortgage payment to your lender, interest is calculated first on the then outstanding balance, and the difference goes toward reducing principal.