Dan West featured in Servicing Management

Bankrupting the Foreclosure Process?

Bankruptcies may be down, but legal and financial uncertainties remain

dan-westBecause filing for bankruptcy is one of the few ways to stop a foreclosure from occurring, it is not surprising that a complex and closely connected relationship exists between the two processes.  Once a bankruptcy has been filed, a foreclosure cannot proceed (with a few statutory exceptions), and as such, declaring bankruptcy has remained a widely used tactic - a strategy of last resort. With that dynamic in mind, it seems evident that the marked decrease in bankruptcies over the last three to four years is partly - and perhaps primarily - driven by the large number of loan modifications that have helped slow the flow of foreclosure from a flood to a more modest and stabilized volume.