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Home Foreclosure and Bankruptcy
22 May 2009 Are you thinking of filing for bankruptcy simply because you are not able to afford your mortgage payments? There are a lot of options out there that can help you avoid this unfortunate situation that has the potential to completely ruin your financial future. First off, let us discuss the types of bankruptcy options out there. The two major types are known as chapter thirteen and chapter seven. Chapter seven financial bankruptcy completely wipes the slate clean of all your finances and all of your debts and assets are liquidated. In addition, your credit score is completely wiped out and your potential to get credit is ruined for years to come. Many people in desperate financial straits who are unable to afford their mortgage payments choose to utilize chapter thirteen bankruptcy. With this method, you work out a reduced payment schedule with your creditors and the monthly payments will be reasonable over a period of around five years. With this method you will receive less of a hit to your credit score and your financial future will remain more or less intact. Keep in mind that bankruptcy is a last resort measure and there are a lot of other opportunities out there to avoid it altogether. If you would like, you can simply renegotiate your loan terms with a mortgage lender. Most banks don’t want you to lose your house because that means they have to sell it in a declining economy and they will usually lose plenty of money on the deal, in addition to any future interest that they would collected on the loan. In the bank’s view, it is better to lose a little bit of money rather than to lose the loan altogether. These tactics are commonly known as loan modification, where the terms will be changed over the short term or the long-term, in order to make sure that the borrower can afford the payments. Want to avoid bankruptcy? |
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