“Bankruptcy” is a word that automatically conjures up highly charged emotions. It normally means that if you are about to file bankruptcy then you are down to your last resort. It is not easy. It is not fun. It is a stressful process to go through. Your finances are in shambles and the old saying, “playing with my money is like playing with my emotions,” rings true in the majority of bankruptcy cases than other situations encountered. Today, you cannot turn on the television without hearing about someone else losing his/her home due to financial problems. People feel trapped in an economical downslide. The economy is having a domino effect causing havoc upon households nationwide. Bills are piling, creditors are hounding, cars are being repossessed. It is a financial mess. And when you have no other means to pay past due bills, bankruptcy emerges as the best clear option. However, what do you do first? You start with hiring a reputable, knowledgeable, experienced bankruptcy attorney.

Bankruptcy is a stressful process. The emotional weight of knowing you are submerged in debt with no other way out than filing bankruptcy takes its toll upon oneself. So why would you chance getting qualified while under such a tense state of mind. What if you are filling out the paperwork yourself, with no attorney to assist in guidance, and the burden of your financial situation causes you to miss something on your bankruptcy application. What if your application is rejected and you have no clue how to proceed forth? You need to take these scenarios in consideration. Especially since, once you file for bankruptcy there is no going back. If you file for Chapter 7 Bankruptcy, then you cannot go back and change it to Chapter 13 Bankruptcy at later date. Once you declare a specific type of bankruptcy then you are stuck with it. Therefore, what would happen if you were unaware of the differences? Perhaps one form of bankruptcy is better suited towards your situation. A bankruptcy attorney will find the correct filing and the most beneficial option for you.

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Nowadays, we continue to hear of troubling news of many families losing their homes to foreclosures. Many factors have been attributed to this woeful fact of modern life, all of which boils down to the global recession and its effects on buying power. Many, too, are looking at short sales as an option against foreclosure. However, before making any decision about your house, it is very important to increase your knowledge of both foreclosure and short sale.
A foreclosure is the legal process wherein the homeowner’s right to the real estate property is cancelled, usually due to defaults in payment of the monthly amortizations over a certain period of time. Said property is then sold at public auction and the proceeds applied to the debt. A short sale is the voluntary sale of the real estate property by the homeowner, with the consent of the mortgage holder, to a third party in which the sale proceeds fall short of the balance still owed on the applicable loan. This usually happens when both parties want to avoid the foreclosure process, which will involve heavy fees for the mortgage holder and poorer credit scores for the homeowner.
Both options will result in losing the house in question although other repercussions especially in terms of credit standing will differ. Unfortunately, there is no foreseeable benefit to foreclosure except maybe galvanize you into adopting better spending habits. A foreclosure severely and adversely affects your credit score, which can drop by as much as 200 to 300 points in one transaction. Furthermore, you have to suffer the consequences of your credit score being on a very low point for many years to come, thus, making it more difficult than usual to obtain new credit of any form. Worse, the mortgage holder can still ask for a court-issued judgment against you for payment of the foreclosure fees, amortization arrearages and interests thereon. A short-sale will only affect your credit rating by 80 to 100 points. And you can usually get your good credit standing in good shape faster than in a foreclosure – 18 months for short sale and up to three years in foreclosure. Also, it takes less time to settle things in a short sale, with lesser costs on both the homeowner’s and the bank’s part. However, you might still have to pay the balance of the principal loan plus interest although you can usually negotiate for more favorable repayment terms. Keep in mind, too, that a short sale is only possible when the bank and other lien holders consent to it, which in many cases, they will not.