Now, according to WalletPop.com, unscrupulous individuals are scamming struggling homeowners out of their money in a slightly different way.

Loan Modification Scams

Apparently, “forensic audits” are at the heart of this scam. Here’s how they work:

• You pay a mortgage loan auditor. Scammers of all sorts are notorious for upfront fees, and the loan modification scammers are apparently no different. If someone asks for fees before performing a service, be very wary.
• The auditor examines your loan for fraud. Theoretically, a loan auditor’s job is to review your mortgage documents and discover any illegal activity on the part of the lender.
• The auditor goes to your lender. Once evidence of fraud comes to light, an honest auditor can take it to the lender and use it as a bargaining chip to get you better terms on your loan.

But, naturally, the dishonest auditors out there won’t follow through. They may fail to thoroughly examine your loan papers, fail to actually visit and negotiate with your lender or simply walk away with your money.

Protect Yourself, Your Money and Your Home

If you are in danger of losing your home to foreclosure, you’ve probably considered applying for the government’s Home Affordable Modification Program (HAMP). To see if you qualify, start by taking this survey at the government’s HAMP website.

Once you know whether you can reasonably expect a modification from your bank, consider researching loan auditors in your area (honest ones may in fact be able to help you find fraud in your loan – and they won’t charge you fees until they’ve actually helped you).

To verify a company’s credibility, check out their standing with your state’s Better Business Bureau (BBB)

Other Options

If a loan modification isn’t in the cards based on your loan, you may be able to stave off foreclosure by filing for Chapter 13 bankruptcy. A bankruptcy lawyer in your area may be able to help you determine whether this is the best path for you.

I’m tired of the bankruptcy stigma. In tough economic times like these, we can’t afford financial judgment.

It’s time for people to realize that bankruptcy isn’t for “slackers” or people who “want a free ride.”

Here are the common reasons millions of Americans seek bankruptcy protection:

Unexpected expenses: Whether it’s a major medical procedure, a natural disaster or an unforeseen car breakdown, major expenses can throw a person’s finances out of whack.

Income reduction: Particularly when the economy is bad, getting laid off or having even just a few hours cut can seriously cut into a person’s available funds.

Job loss: When a person loses their job, their whole world is turned upside down. Even if they were able to stay on top of their bills before losing their job, bankruptcy may now be the only relief for the bills that piled up after the job loss.

Injury or illness: It’s no secret that medical bills can add up quickly. Especially if you’re one of the tens of millions of Americans without health insurance, medical costs can mean serious problems for your finances.

Divorce: Stretching income that use to cover one household over two can cause strain – and that doesn’t even take into account lawyer and court costs.

Births or deaths in the family: Funeral costs, hospital costs, caring for a new child – we often don’t think of the price tag on these events because they’re so emotionally charged; but major family changes can hit the bank account hard.

Identity theft: Though laws are in place to protect identity theft victims, some still find that their finances cannot be salvaged and need to turn to bankruptcy.

Overextension of credit: This one may be a little more within a person’s control – but it can certainly make any of the others on the list worse.

Learn more about filing bankruptcy

So, let’s stop judging and let’s start dealing with our debt.

If you’re tired of worrying about debt, harassment from creditors, overdue bills, meeting your daily expenses, you may benefit from filing bankruptcy.

If you’re in danger of losing your home to foreclosure, unable to catch up on long-term debt or have been blindsided by an unexpected financial setback, you may also benefit from filing bankruptcy.

Before Filing Bankruptcy

If you’re considering filing bankruptcy, here’s what to keep in mind:

1. Find a bankruptcy lawyer near you. Because of recent changes to bankruptcy law, filing a case (whether it’s Chapter 13 or Chapter 7) can be more complicated. When you work with a bankruptcy attorney, you can focus on your life and let a lawyer focus on legal regulations.
2. Don’t make any major financial maneuvers. Some people make the mistake of transferring property, giving away valuables or charging large purchases before filing for bankruptcy. But actions like these are often viewed by the court as bankruptcy fraud and can cause your case to be dismissed immediately.
3. Complete your credit counseling briefing. Before a bankruptcy court will accept certain bankruptcy petitions, your must file a certificate of completion of the credit counseling briefing, which verifies that bankruptcy is your only viable option for eliminating debt.
4. Get ready to make a commitment. Bankruptcy may provide you with a fresh financial start in life, but it’s up to you to follow through and maintain financial health after bankruptcy.

Talk to one of our sponsoring bankruptcy lawyers today.

I’ve teamed up with a Total Bankruptcy contributor to bring you some facts about filing bankruptcy.

What Happens to My Credit After Filing Bankruptcy?

Most people considering bankruptcy wonder how filing for bankruptcy will affect their credit. Before you make a major financial decision, make sure you do your research:

1. Bankruptcy and Your Credit Report:

A bankruptcy filing will stay on your credit report for 10 years. This may seem like a long time, but consider this: as time passes (and you develop healthy credit habits), the effect of bankruptcy on your overall credit rating often diminishes greatly.

2. Borrowing After Filing Bankruptcy:

You may fear that filing for bankruptcy will ruin your chances of ever borrowing money again, but when you think about it, how easy has it been getting new loans when creditors see you are delinquent on your current payments?

Most lenders will review your credit history, but recent credit action tends to matter more than old credit action. In other words, staying out of unnecessary debt after your bankruptcy can have a positive impact on how lenders view you.

3. Loans After Bankruptcy:

It’s certainly possible to obtain loans after you file for bankruptcy. Total Bankruptcy has nationwide online relationships with lenders who are friendly to bankruptcy filers.

4. Credit Cards After Filing Bankruptcy:

You may think that you’ll never want another credit card again, but the truth is, you’ll likely need a credit card after bankruptcy to help establish a strong credit history. Find out how to avoid credit cards that cost too much – and find ones that will help you stay on your feet.

Learn more about filing bankruptcy.

But the truth is that bankruptcy has been a real debt-relief solution for millions of people who’ve struggled with debt, unfair interest rates and mortgage terms, job loss, divorce, unexpected medical costs and/or wage reduction.

If you’re deep in debt and are having trouble paying your bills or making ends meet, bankruptcy may be able to help you get out of debt once and for all.

Ask yourself these questions:

• Are you heavily in debt, with little prospect of getting out of that debt in the near future?
• Are your creditors threatening foreclosure, repossession or other legal action?
• Have you experienced a dramatic drop in income?
• Are you frequently late paying bills?
• Do you only pay the minimum on your credit cards?
• Are you paying more money than you make on just your monthly living expenses?
• Have you recently become partially or totally disabled?
• Are you going through a divorce resulting in a decrease of income but an increase in expenses?

If you’ve answered “yes” to any of these questions, filing bankruptcy may be an option for you. Read on for information about the two types of personal bankruptcy.

Filing Chapter 7 Bankruptcy

This type of bankruptcy is often a good option for people who:

• have lots of unsecured debt like credit card debt, medical bills and outstanding payday loans
• have little/no money after paying monthly living expenses & bills
• rent their home or have little equity in their home

Chapter 7 eliminates unsecured debt and stops creditor harassment–and the process usually only takes a few months.

Learn more about filing Chapter 7 bankruptcy…

Filing Chapter 13 Bankruptcy

This type of bankruptcy is often a good option for people who:

• have a steady income and can pay for basic necessities but are having trouble making scheduled payments on debt
• have significant equity in their home/property
• are facing foreclosure

Chapter 13 bankruptcy stops foreclosure proceedings and gives you 3-5 years to catch up on past-due bills. Under Chapter 13, you are put on an agreed-upon payment plan where you make just one payment each month.

Learn more about filing Chapter 13 bankruptcy…

First Step: Talk to a Bankruptcy Lawyer

A bankruptcy lawyer is a good resource who can help you determine whether filing bankruptcy is right for your specific situation.

Talk to a bankruptcy attorney today.

What Do You Think About Filing Bankruptcy?

If you’ve filed bankruptcy in the past or are thinking about filing bankruptcy, let’s hear from you.

What was your experience? What are you thinking about? What do you think about filing bankruptcy? –Leave a comment so we can share our thoughts.