Monthly Archives: March 2013

Foreclosure Options and Bankruptcy

Foreclosure Options – Bankruptcy?

foreclosure optionsAlthough there are lots of foreclosure options, bankruptcy seems as though it’s the one that most homeowners have the biggest trouble with. Bankruptcy was created to protect individuals not hurt them. Things happen, many times out of our control. The most common bankruptcy filings are simple because someone gets sick. They can’t pay their medical bills and so they have no other option but to file. In real estate it works the same way. Life happens and sometimes it’s the best foreclosure option.

Though it should be one of your last resort efforts, bankruptcy is also an option that could save you from foreclosure. Personal bankruptcy comes in two types, Chapter 7 and Chapter 13. Chapter 7 will liquidate or eliminate debt, while Chapter 13 helps you pay off debt through court protection and supervision. Bankruptcy may seem like a simple or good solution to your financial struggles, but there really is more to it. It’s a very lengthy and complex legal process that can come with some consequences.

For most situations, it can be a great help, but remember to exhaust all of your other options before you get here. Since financial circumstances can vary greatly, you should seek the advice of professionals when determining if or which type of bankruptcy will be right for you. Speak with an accountant, financial planner, or a bankruptcy attorney. If you don’t have an attorney, then at least seek out multiple opinions before acting on the most extreme option.

Remember though, bankruptcy only stops the foreclosure for a certain period of time. Then, depending on which Chapter is filed, the home will either be sold, auctioned, or you’ll continue to make payments as before.

Cut Your Losses and Sell Your Home

Now obviously this isn’t an option if you owe more than the home is worth. However, often times selling the home is the best option for someone facing deep financial debt as long as they have equity. This allows you to gain up to 100% of the equity of your home, minus the costs to sell. Typically, this will be close to or more than enough to absolve the money owed on the mortgage. Though for many selling a home is easier said than done due to emotional attachment. This often allows one to ignore or avoid the realities of their financial hardship, and it encourages one to search for magic bullets until it’s too late to salvage their credit. It should be known that there are no magic bullets in these foreclosure options, but with hard work and planning can turn things around.

If you can assess your current financial circumstances reasonably, selling the home can even help you retain the ability to be a homeowner in the future. This is something you really have to think about when facing foreclosure. If you cannot find a way to avoid it now, it may be impossible to obtain a mortgage in the future. Don’t let your future or your equity be eaten up by past due balances and high interest loans, sell the home and move on. While it may be hard, consider that you may be able to get an even better home once you’ve improved your financial state.

Many of us will face financial hardships at some point in our lives, but you can protect your credit and your future by putting a good plan into action immediately. This quick action can help you preserve assets and eliminate debt. If you still end up facing issues, then these foreclosure options will help you keep your house or at least avoid the financial ruin that can prevent you from being a homeowner ever gain. Make sure you actively weigh all of your options and seek the advice of professionals to determine which solution will be best for you and your family.

Foreclosure Guidelines to Handling Your Debt

Foreclosure Guidelines to Handling Your Debt

foreclosure guidelinesDue to the state of the current economy, a lot of homeowners are facing the possibility of foreclosure. When this happens, you have to quickly determine what’s gone wrong and come up with a reasonable solution to make things right again. Whether you have faced a demotion, layoff, or sudden illness, making the effort to explore every alternative can help. There are actually several options available to solve this financial hardship, and I’ll share a few of these foreclosure guidelines with you.

Refinance with an Institutional Lender

One option to avoid foreclosure is to bring your payments up to date with a loan from institutional lenders. You can do this by borrowing with your home’s equity, also known as refinancing. The equity of your home is determined by comparing the current market value of your home with the amount of money you still owe on your mortgage. Refinancing simply involves taking out another loan to pay off the previous mortgage.

Choosing to do this can actually make keeping your house more affordable. Refinancing can extend your payment period, which can significantly lower your monthly payment and interest rates. Yes, the fact that you are near foreclosure can make lenders a little concerned about opening a loan with you, so it’s important to act on these foreclosure guidelines quickly before back payments have made a major impact on your credit rating. If it’s too late, expect higher interests rates, but refinancing may still hold benefits for you.

Acquire a Loan from a Private Lender

You could also try obtaining a loan through a private lender. Private lenders are individuals or companies that are looking to make higher, faster returns on their funds than savings and stocks can provide. They are typically more interested in the equity of the home than anything, so it may be easier to obtain help from them. Even those considered at-risk due to defaults in their credit history may be able to find a solution here. I have a friend that runs a private lender database you might want to check out here.

However, you should remember that loans like this will always have much higher interest rates than what you would find from a bank. If you have bad credit, these lenders will be less willing to help you out if you ever miss a payment again. They made the deal with you based on the security of the investment in your properties value, so you would be at a high risk of losing your home again if payment obligations can’t be met. If you feel this may be a problem for you, then put more emphasis on the other foreclosure guidelines or alternatives available.

Settling Your Note

This might come as a surprise to some but you can actually settle your 2nd mortgage (if you have one) for less than what you owe. Similar to a short sale, however you get to stay in the home and it doesn’t affect your credit if you do it right. You also don’t need to be behind on payments. Really what they look for is a hardship of some kind. Really a great strategy for those looking to eliminate some debt. The only downside to this strategy is that you may have to come out of pocket to payoff the note.

For example if you owe $80,000 on your 2nd and they agree to accept $20,000 as a payoff, you’d have to come out of pocket $20,000. But there are ways to pay that off and get a more manageable monthly payment because you just eliminated $60,000 in debt.

Make More Money

I’m sure that exactly what you wanted to here for a foreclosure guideline. I’m sure you would love to make more money, if only you had the time and know what to do, right? Well watch this video of Cameron Dunlap and he’ll show you a few things you can do to make some extra money.