Have you been able to accumulate money in your bank account because you stopped paying your mortgage to get your lender’s attention? Some people I’ve come across recently have been told to give that money to friends or relatives. I’m told that consumers are being informed that the money can then be left off of a loan modification application.
The problem with this advice from a bankruptcy standpoint is that those transfers are made in fraud of creditors and recoverable by a bankruptcy trustee. If you are one of these people, you should know that bankruptcy is where you will likely end up.
Countless modification applicants end up in the office of a bankruptcy attorney on the eve of a foreclosure sale because SURPRISE, your modification was denied. And the money you transferred to your relative can not be exempted because it is no longer in your possession. Waiting to the last minute means the eventual bankruptcy problem will be full of surprises and problems.
So, if you think your loan mod professional is great and you have nothing to worry about because he’s giving you all this “expert” advice, consider thinking ahead about what the next step will be if your modification application is unsuccessful.