When it comes to elimination of huge debts people either think of filing bankruptcy or to opt for debt settlements. Regardless of the law a settlement is always considered to be better than filing a bankruptcy. With introduction of new law things will change to a certain level but financial settlement will still continue to be a better option for creditors as well as the debtors. The financial institutions were never in favor of the old bankruptcy law as they could not recover anything from the person who filed bankruptcy under chapter 7. In case the debtor qualified under chapter 13 of the bankruptcy they still had to wait for the specified period to recover certain amount of their debt. The debtors preferred settlement more than bankruptcy. Bankruptcy can stay on their credit reports for a period of 10 years which is a very long time span. To some extent the new law is certainly in favor of creditors as more and more people will be forced to file bankruptcy under chapter 13 which means that the creditors would be able to recover at least some portion of their lending. Even with new bankruptcy law the settlement still remains a better option for creditors as well as debtors. Debt settlements lower the debtor’s credit score but this is preferred over bankruptcy staying on their credit report for a longer time span. One might feel that with new law for bankruptcy creditors will not be so flexible for settlements. On the contrary no drastic effect would be there on the negotiations for the financial settlements. There are many reasons for this. With new law if the person qualifies for chapter 7 the creditors get nothing. Even if he qualifies for chapter 13 then also the creditors have to wait for a period of 5 years before they could recover 30 to 50 percent of debt. If they are in a position to recover the same amount in a lesser time span by through the debt settlement option they would naturally prefer it.

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There are many people across the country in the same situation as you. They are either laid off or just making less money and are having a hard time paying their bills including their mortgage. You are behind on everything from credit cards to utilities to your mortgage and your lender is out of patience. The lender is calling you constantly and telling you your home will become a bank foreclosed home if you do not pay. Where is the money going to come from, though? You just do not have it. Then the bank goes ahead with their threats and your home is in foreclosure. You get the official word from the lender through the mail. If your home is not a bank foreclosed home yet, there are still things you can do to stop the process. You should communicate with your lender before it gets that far. Tell them what your situation is and what is causing your financial problems. If you are honest with them, they are more likely to work with you and try to help you out. You may have to put everything about your financial situation in writing and sign it so they have a copy for your file at their offices. The more information you can give them the better. Let them know what other bills you are struggling to pay and more importantly, what you are doing to try and get your finances back in order. Tell them about your job search or your efforts to borrow money from your family. The more you communicate with them the more they will work with you so just take whatever help they offer and be glad they are doing something for you. Whatever you agree to, make sure you live up to your commitment. You need to do whatever it takes to stop your home from becoming a bank house foreclosure and the best way to do that is to get your lender on your side. You want them to be your friend not your enemy in this situation. Once the bank foreclosed home papers are filed, there is no taking them back no matter how nicely you ask. You can even catch up on your payments and the foreclosure process is still potentially going to go through. As soon as you get the notice of foreclosure from your lender, there are some things you need to do. The longer you wait to do something, the more the lender is going to add fees and fines to your account balance making a bad situation even worse. You need to find a resolution as soon as possible.

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