Dan West featured in Servicing Management

Bankrupting the Foreclosure Process?

Bankruptcies may be down, but legal and financial uncertainties remain

Because 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.