Are you thinking about filing for bankruptcy? This process can seem daunting and overwhelming in the midst of an already stressful time. Here are the basic steps in the filing process:

1) Review Your Finances & Compare Against Monthly Expenses

It is important that you know how much you owe and who you owe. Sort through all of your bills and create a list of all your creditors and how much you owe each of them. Many people avoid looking at this information because it causes more stress. Ignoring it will not make it go away. Although it may be stressful for you to face this list, it is the first step in organizing yourself. If necessary, ask a trusted friend or family member to help you compile the list. The most important thing is to make sure you have everything listed.

2) Attempt to Modify Any Outstanding Loans or Debts

Contact each of your creditors. Many of them will be likely to consider modifying your payment plans or accepting a lower payoff amount. Take the time to explain to them that you are trying to take care of your outstanding debts and that you hope to work together. Often times, the first person you get on the phone will not have the authority to accept a modified payoff or change payment terms. Don’t be afraid to ask for a supervisor. Be sure to keep good records of when you have contacted each creditor and what terms were discussed.

3) Be Aware of Any Upcoming Foreclosures or Judgments

When you are facing an upcoming foreclosure or judgments, it is important to know that you are now working against the court’s timeline. It is important to know what dates and limitations they have placed on you. If you are facing a foreclosure or judgments, it is very important to contact an attorney to assist you. They will be able to tell you the next steps you should take.

4) Hire an Attorney

If you are facing the need to file for bankruptcy, this is not a time to try to take on representing yourself. Creditors are very skilled at this process. They can and will do everything they can to make this process more challenging for you. Although the idea of spending more money on hiring an attorney may seem unreasonable at this time, it is the best first step you can take. Bankruptcy attorneys can walk you through the process and help you along the way, providing the much needed relief you are seeking.

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What Causes Foreclosure?

There are multiple causes for foreclosure. Typically, foreclosure begins when a homeowner is not able to make monthly payments on their house, regardless of what type of hardships initially caused the financial problems. Foreclosure can be devastating to the homeowner.
Resulting in:

-Loss of residence (at the very least a loss of equity in the home)
-Delinquency on credit and/or default on credit (significantly effecting the credit score)
-Lawsuits (by collection agencies or the IRS)
-Potential loss of employment
-Increase in stress and rash decision making (which could result in relationship hardships)
-Bankruptcy

Facing foreclosure? What Next?
One of the best ways to stop a foreclosure is to talk with your lending company.Talking with a qualified realtor can help you with all negotiations if you decided to sell your home to prevent a foreclosure. This is known as a short sale. If you wish to stay in your home, you should talk with your lender to possibly modify your existing loan or negotiate a refinance of your loan. There are many ways you can avoid foreclosure but you cannot sit back and hope for a miracle to land in your lap.

Is a short sale right for you?
Homeowners faced with foreclosure may chose a short sale because they will not need to worry about credit ratings, debt obligations and more to the point, they will avoid foreclosure and bankruptcy to name a few. This could be a plausible option to avoid foreclosure proceedings and allow them to start with a fresh perspective. This can be a tough option for most due to sentimental value. Losing a home is never a good situation.

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If you are experiencing severe financial distress due to the recent downturn in the American economy, you certainly are not alone. Many people who never thought they’d lose their jobs and who have always been able to support their families are now finding themselves in a position of having to fend off creditors and making difficult choices about which bills to pay and when. If you are falling further and further behind and cannot decide between filing Chapter 13 bankruptcy and trying to obtain other debt consolidation help, here are some facts to consider.

Keeping Your Home

Under Chapter 13: You usually can keep your home if you agree to continue the lender’s lien on it and are diligent in making your agreed-upon monthly payments after the Chapter 13 terms are made. Any back payments owed to the lender will have to be repaid as part of your Chapter 13 payment plan, of course.

Debt Counseling: A home equity loan, though tempting, does not give you any real protection Against property seizure should you be unable to repay it. If you agree to put any existing sheltered equity into the terms of the loan agreement, you risk losing that money as well.

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