Bankruptcy Vs Foreclosure – Is Filing Bankruptcy Better Than Letting House Go Into Foreclosure

Bankruptcy v/s foreclosure – the choice is just not easy! Basically the two are loosely intertwined. He choice would then depend on ones’ individual need & situation. Let us begin with clarifying the basics of these two legal phenomena.

Bankruptcy is what the borrower decides for himself. You can declare bankruptcy under Chapter 7 or Chapter 13. Here you declare yourself bankrupt – that is, you say that you do not have the finances to meet the debts. Chapter 13 is preferred over Chapter 7 as it leaves a scope to file the latter if need be.

Foreclosure is filed by the lender in case the borrower does not pay the monthly payments. But filing of a foreclosure does not mean that you have become bankrupt already. Even if the borrower has got the ‘Notice of Default’ there is nothing to get panicky. Until the actual auction takes place the home owner has time to work out the scenario. They have several options like short sale, deed in lieu of foreclosure, loss mitigation, loan modification, forbearance, etc. Particularly short sale is done only when the home owner has lost all hopes that he / she can afford the home. Now in that case, it is not necessary that your debts would get cleared off with the short sale. Some times the mortgage amount is higher than the current value of the house. Though, some lucky home owners stand a chance that the lender ‘lets go’ the remaining amount.

The wisest thing on the part of the home owner is to talk out the financial constraints with the lender in time, that is, before the lender files a ‘Notice of Default.’

In case you think that filing a bankruptcy would save you from the foreclosure and would let you keep the house, it is not true. The only condition on which you can continue to keep the house is to pay back the loan amount. Yet, bankruptcy helps in bargaining some time from the lender. Actually, bankruptcy lends you a legal shield where the lender is forced to stop all legal actions he / she is taking up against you. That way, you get some time to help your self to arrange some money. Then another valid point is that bankruptcy discards some unsecured loans that further save you some more money for the home mortgage payments.

In both the alternatives, you have a bad credit score. A foreclosure stays on your credit score for 7 years and bankruptcy stands for 10 years. The home loan lenders though hold foreclosure as a rather bad credit remark than bankruptcy.

At last, we can only say that hasty decisions can be very harmful. You must consult an experienced lawyer before you take any further step!

President Obama has offered $1000 incentive for home owners that opt for Loan Modification instead of Short Sale Or Foreclosure
For more information please visit: http://www.floridalawattorney.com/

Comments (0) Mar 17 2009

The Beginning of Foreclosures

Foreclosures are rapidly growing to an ultimate high 2 out of 100 loans are in the foreclosure process. The housing prices are increasing in the country and the rates are causing consumers to reevaluate their budget and cut back on expenses. Most consumers are going into the foreclosure process to get a market value rate in order to keep their houses.

The best type of investing today is in foreclosures due to the rates being at market value prices, many banks are flooded with foreclosure properties and are in need of investors and home buyers to apply. The banks are selling foreclosures homes at the auction every weekend. Most consumers, Investors and Real estate agents today now have the opportunity to purchase multiple foreclosure homes and put into inventory, to offer to homebuyers. They are setting up establishment with the homes, some are being created as residential family home daycares or personal care homes.

If you do not have experience with investing or real estate, it would be a career opportunity for you to pursue an education and join the venture. It is a stable and profitable income. This field requires hard work and time and effort. If you work diligent you will have stable income for a lifetime.

There are many banks that lend money to individuals for the purchase of a home and they are given a certain time to pay back. The purpose of the lending is to make a profit by the interest and tax that the home buyer pays in the mortgage payments. If the borrower or homebuyer fail to maintain the payments they must surrender the home and it is then returned to the lender and they either work with the borrower to established arrangements or they repossess the home and sell it at an auction to redeem their money back through the foreclosure process.

All lenders are willing to work with each individual before they repossess the home but unfortunately they have a limited time that they can wait for payment. If the borrower cannot prove sufficient income the home becomes government property and other matters take place.

An important aspect of the foreclosure process is that it every state has different rules and regulations that you must follow. You would have the opportunity to keep your home, by following certain rules, if you fail in that process other matters and procedures will begin.

The foreclosure process:

For most states the foreclosure process is taken place in the court room, it normally starts when the homeowner fails to maintain their mortgage payments. The process is as follows:

1. The lender files a lawsuit against the borrower. 
2. The borrower has the opportunity and a certain amount of time to respond to the complaint. 
3. The court date is scheduled and notices are sent out to all parties. 
4. The hearing is evaluating by the presiding judge, and they determine the validity of it. 
5. If the determination is foreclosure, the date is then given by the judge to auction the property. 
6. It is then published in the newspapers to the public. 
7. The person that bids highest wins and the money is paid including taxes and fees on the property.

After the foreclosure and sale of the property takes place, a “deficiency judgment” is filed against the borrower, and they would be forced to relocate elsewhere.

For more information please visit: http://www.floridalawattorney.com/

Comments (1) Mar 17 2009