Unfortunately, many homeowners don’t contest the foreclosure and end up losing their homes or have tried to find a solution to stop foreclosure through conventional means i.e. Chapter 13 Bankruptcy or through a loan modification with moderate success overall. The problem though is that a Chapter 13 almost requires that you hire a lawyer to get it done. If you hire a lawyer, you will need to pay a fee of about $3,500 or more plus court fees. Yes the payments can be put in the bankruptcy monthly payment plan but guess what? The payments mostly all go toward fees before one dime goes towards paying off your debt. So you have essentially picked up another creditor. This is not what you need if you are having trouble making your mortgage payments.

A loan modification is troublesome because many lenders are difficult to work with if you try to do a loan modification yourself, so you almost have to hire a third party to negotiate your loan modification terms for you to get it done. And while there are some reputable companies that offer loan modification services and even free services, many scammers take your money and let the house foreclose. So you have to be careful about who you decide to work with.

Typically your mortgage lender is unwilling to grant you the best deal in a loan modification at first. Generally, a loan modification or filing a Chapter 13 first is not the best alternative to stop foreclosure. It will be necessary to challenge your mortgage lender’s rights to foreclose to ensure you get the best deal to receive a mortgage note you can actually afford to stop your foreclosure.

There is a growing trend across the nation which local judges are issuing court orders to stop foreclosures because the lenders are unable to show that they legally own the mortgage notes in due course.

In other words lenders are failing to show proof how they took possession of the mortgage notes. A good example of this would be like having anyone off the streets approach you and say, “You owe me $140K pay me or I am going to foreclose on your home.” Without showing any proof that you owe that person, so why should you pay the lender without any proof that they own your home? This is essentially what the majority of mortgage lenders are doing today and largely lenders can not produce the original mortgage notes but have a harder time showing that they own the mortgage notes in due course to have a legal standing to foreclose.

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Foreclosure could be avoided by several solutions. There are lot of options for you to prevent it. But if you are not able to avoid it, you must know the ramifications of foreclosure. You need to understand that the credit score is going to get reduced by more than 200 points. This will affect your future chances of getting the loans. Most lenders would not want to give loans to people with bad credit. The interest rate will always be higher if you tend to have a poor credit rating. Moreover,you will be needed to show the lender that you have had foreclosure in the past. Some people prefer to use the short sale rather than the foreclosure. The short sale has less negative ramifications than the foreclosure. The cost associated with the foreclosure will also be high. Lenders actually prefer the short sale over the foreclosure.

The foreclosure will remain in the credit report for a long time. It would be there for at least seven years. You need to take every action possible to improve the credit score. One solution for you to keep the credit score high is to pay all the other debts. Make sure that you are not making late payments. As I said earlier, it is always better to avoid the foreclosure. You must never be hesitant to talk with the lender. You can give every honest reason and can get a forbearance to prevent foreclosure. The lenders will be ready to give maximum support to avoid the foreclosure.

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Have you found yourself feeling a little overwhelmed by the amount of debt you are carrying and are considering filing for “credit card debt bankruptcy?” Of course, there is no such thing as credit card debt bankruptcy, per se, bankruptcy is just bankruptcy, but having too much credit card debt is a common reason for many folks to consider filing for bankruptcy. Depending on your own unique circumstances, you may indeed be justified in filing, but sometimes you are no better off after filing than you were before.

Why? Well, a few years back, the bankruptcy laws were changed dramatically and it is now much harder to use the bankruptcy system to completely wipe away your outstanding debt – what is known as chapter seven bankruptcy. The process is time-consuming, challenging, and almost always requires the assistance of an attorney who specializes in it. In fact, your income may not allow you to even file for chapter seven; if you make a certain amount of money – usually more than the median income for people in your state – you are not eligible for chapter seven and must file chapter thirteen.

Chapter thirteen bankruptcies are not a “bad deal” necessarily, but they may be. Essentially, a chapter thirteen will simply end up as a court-ordered restructuring of your debt, so now if anything happens and you have to miss a payment for some reason, you are breaking a court-ordered payment. Of course, it is almost impossible to miss a payment, as the most frequent result of chapter thirteen is that the judge assigns your case to a trustee who takes over the duty of making your payments for you, after he/she renegotiates with creditors and most likely reduces your interest rate, deletes any outstanding service charges, does away with annual fees, and probably even reduces the total amount owed to a lesser amount.

Of course, chapter thirteen filings do have the same negative impact on your credit score as chapter seven bankruptcies do; therefore, your debt is not gone, you still have to pay a rather large sum every month, and your credit score is reduced just like those who file chapter seven.

If your credit card debt is just way out of your ability to pay range, bankruptcy may be your best option, but before you declare “credit card debt bankruptcy,” be sure to determine if it is your best option.

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