Foreclosure & Alternatives Law
Bankruptcy or Foreclosure?
Sadly, sometimes there is simply not a way to make your current financial situation work. This can mean a choice between foreclosure or filing bankruptcy. There is no easy answer when finances are just not adding up, and tough times require difficult choices. However, there are some things that you should consider when you are behind on mortgage payments and foreclosure or bankruptcy is looming:
- Are There Alternatives? Is your mortgage holder willing to negotiate with you to change the terms of your mortgage? It is important to make sure that you speak with your lender and negotiate to the greatest degree possible before foreclosure or bankruptcy becomes inevitable, as both significantly hurt your credit score.
- Do You Want to Continue to Live in Your Current Home? If you want to continue to live in your current home and were not able to work out an agreement with your mortgage holder, then bankruptcy might be your only option. Under Chapter 13 bankruptcy, your debts are reorganized, including mortgage payments you owe. If you make regular payments according to the bankruptcy plan, you can stay in your home. You can stop foreclosure by paying back what you owe, but unless you suddenly have a lot more money than you did, it’s typically harder to save your home in foreclosure proceedings.
- Do You Have Other Assets that You Want to Protect? Foreclosure, unlike bankruptcy, only affects your home. If your home is foreclosed then the home is sold and the proceeds pay off your mortgage. The rest of your assets are not affected by the proceeding. Bankruptcy, on the other hand, will look at all of your assets and debts.
Sometimes foreclosures and bankruptcies are necessary. They can relieve you of overwhelming debt and allow you to start over and live your life without the constant stress and worry created by not being able to pay your bills. So, if you, like many Americans, are facing tough economic times, it is important to consider all of your financial options before making a decision about how to proceed.