Feb
26
Can I File Bankruptcy To Avoid Forclosure And End My Mortgage?
ByAs a last last result is it possible? I can no longer pay for my mortgage. I have been trying to sell my home and I will next try a deed in lieu , should it fail I will have less options. i want to know all teh options besides foreclosure. And please dont tell me to stay in my home. I need real answers from realtors or people who have been in my shoes.
7 Comments
February 26th, 2010 at 2:55 pm
Harry…you can contact a local bankruptcy attorney to find out what your options are, most will see you free the first time. You have a choice in a chapter 13 filing and keep the home while running payments thru the plan in order to keep the home. The trustees pay your secured debts first the un secured last. A bankruptcy attorney will look at your income, assets, debts and taxes to determine what you qualify for. You can review more bankruptcy information at their offical site @ http://www.usbankruptcy.gov Excellent site which will tell you the differences between the chapters and how they work and what is needed in each. Good Luck!
February 26th, 2010 at 5:19 pm
no BK is just for personal debt. If you think by getting rid of your personal debt you can afford your mortgage and bills then you should look into it but if it is just the fact that you simply can’t afford your mortgage then you should work on the deed in lieu or short sale if possible. Start looking for affordable housing now and stash as much money away as you can llok for storage and in the meantime work with your lender as much as you can to dealy the process and see if they have any modification programs available.
February 26th, 2010 at 11:24 pm
Yes, by filing chapter 13 bankruptcy you protect all your assets from being seized by creditors to satisfy a debt. You can get the legal forms, instructions, and everything you need to file for bankruptcy on your own, without an attorney, at – http://www.legalformsbank.biz/bankruptcy… – and you can learn more about the procedure there.
February 27th, 2010 at 3:56 am
bankruptcy or foreclosure i would think would ruin your credit and you will end up paying 4 it in what seems like forever..(10 yr’s) after the paperwork is done and you want something on credit, the interest rate will be sky high.. i doubt you will be able 2 rent a place in your name.. chances are you will need 2 use someone’s name 2 get lights, gas and phone .. your car ins. will double .. is it 2 late 2 take in renters 2 help you will your bills ? have you tried putting a ad in the paper 2 just let someone take over your mortgage 2 save your name ? maybe a store in the area has free ads board.. where are you located ?
February 27th, 2010 at 7:29 am
you won;t get to stay in the house if that happens and you can forget about getting a new house for many years – bankruptcy is far worse than foreclosure
“end your mortgage” = end your time in the house
February 27th, 2010 at 11:08 am
I have personally gone through bankruptcy, worked in the legal and government field, and I currently work in the Real Estate field. Although I am not an attorney and you should consult with an attorney, from my understanding and what I have been told by various reliable sources including a bankruptcy attorney and mortgage lenders…
If you file bankruptcy, you can include your mortgage in that bankruptcy. It does not stop the foreclosure process as they are two separate things. Although the home will end up being foreclosed on and the bank will take repossession, whatever you owe on your mortgage less what they finallay sell it for (the difference of what you owe versus what they ended up getting for it), they can still legally come after you for. Whether they choose to do this or not is up to each bank/lender. So, in the end, if you allow the home to be foreclosed on, you may still end up being responsible financially for a portion of it.
Please know that it takes (realistically) approximately a year to be foreclosed on and literally kicked out by the sheriff’s department. If you’re in a bad state, as it sounds you are, I would just stay in the home and stop making the mortgage payments. It sucks, but if you’re so far in, what’s the point? Continue living in it and let the foreclosure process start. At most, you will have a year to live in the home for free while you save up as much money as you can to find some place else. Sure, it’s not morally correct or ethical, but if you’re desperate, what other choice do you truly have? Do not destroy the house. Leave it in a condition where the bank can re-sell it without much trouble when they take possession of it.
If you are not already at the foreclosure point, but are only a payment or so short, then consider a “short sale”. Many consumers do not know about this option and it’s not guaranteed, but it’s MUCH better than bankruptcy or a foreclosure, which affect your credit score enormously AND stay on your credit. A short sale will only drop your credit score about 70-points as opposed to 300-400 with a foreclosure. You would need to list your home for sale and all offers would be subject to the bank approving it, not just you. The point of a “short sale” is that you sell your home for as much as you can, all the proceeds go to the bank directly, and whatever difference there is between what they get and what you owe on your mortgage is “forgiven.” Basically, the idea behind this is that the bank cuts its loses short by forgiving what you owe for what they ended up getting for the house by selling it to someone else and in the interim, you are living in the home and keeping it in good condition. Many banks are actually participating in these type of transactions since so many people are in your shoes. It doesn’t hurt to give it a try. You need to contact your bank/lender to find out what their exact process is for a short sale.
February 27th, 2010 at 4:46 pm
I hate it when people give incorrect information on here, especially about something so serious.
Yes, you can give up your home and mortgage in a bankruptcy. In fact, if you can’t pay the mortgage, then you can’t keep the home.
It’s true that if you could afford it but had just fallen behind, bankruptcy could also help you get your payments caught up over time.
No, bankruptcy is not worse than foreclosure. They both take a big chunk out of your credit score, but you have a better chance of rebuilding your credit after bankruptcy than with a foreclosure.
It’s actually the law that helps this happen. Because you can only file bankruptcy every so often you actually become a better credit risk than someone who is behind but not filing (because that person can still file and the creditors are taking a risk they will).
Most people are eligible for bankruptcy and depending on your situation you may be eligible for a Chapter 7 (quicker).
Don’t let people tell you bankruptcy is the worst thing you could do. It was created so that when people get in over there heads (due to divorce, medical problems, loss of jobs, unexpected death in the family, the current economy, etc.) they would have a way out instead of living in a pool of debt.
Debt causes a lot of other problems, medical issues due to stress, depression, crime, etc. Bankruptcy aims to stop some of that.
Call your local bar association. Ask them for a bankruptcy attorney who offers free consultations (most do). They’ll sit down with you, get all of the information they need from you, and give you advice on whether you can/should file a Chapter 7 or Chapter 13. (Don’t let people tell you that the new bankruptcy laws make 7’s impossible either, that’s simply a myth).
Bankruptcy attorneys are very busy these days due to the economy, so they’ll give you their advice and let you make the decision on your own.
It will make you feel better to have the real knowledge. Don’t be afraid to talk to an attorney. They don’t bite and they aren’t going to judge you.
Foreclosure can get pretty ugly, but it’s not the end of the world either. You do have to be careful about possible tax implications of a deed in lieu. You may want to stop in and talk to an attorney about that anyway.
Good luck. Times are tough. You aren’t alone.