Bankruptcy: A Good Financial Decision?

If you are facing foreclosure and you have tried all your options to avoid impending disaster, it may be time to consider filing for chapter 13 bankruptcy to stop your foreclosure on your home loan. A bankruptcy can completely stop all foreclosure proceedings and allow you to get back on your feet, so you don’t lose your home.

Many times, with a chapter 13 bankruptcy, the court will either work with you to come up with a payment plan to repay the back mortgage payments due, possibly minus some interest and help you to resume your current mortgage payments. If, however, you cannot afford your current payments because of a flexible rate mortgage that has you overextended and you cannot get refinanced on your home, then the court may give you a loan modification, so that you can continue to pay toward the principal of your loan and some interest, but not nearly the rate that your flexible rate ballooned up to.

This is great news for people who are struggling to keep their homes, but didn’t consider filing chapter 13 bankruptcy, because there was no way they could afford to make their current mortgage payments each month. Now, filing chapter 13 bankruptcy might just be a more feasible option that will help you to keep your home and continue making payments on it, while satisfying your home lender of your back loan. A chapter 13 bankruptcy doesn’t look as bad on your credit as a traditional chapter 7 bankruptcy, which just writes off all your debt, as long as you stick with the program and make your monthly payments.

When you’re going through the process, however, don’t automatically turn to bankruptcy to save your home from being foreclosed on. You should talk to your lender to see if they can help you by giving you a loan modification without needing to file bankruptcy. Often, lenders really just want their money, so if you’ll work with them to come up with a repayment plan that works for both of you, they will likely not foreclose on your house. Often, all it takes is a phone call to make your loan work for all parties, because lenders have more empty homes right now than they know what to do with. What they’d really prefer is if you make your payments and ensure that they are on time and stay in the house, but if you can’t be on time, most lenders will work with you to make sure that you are able to make some kind of payments to get caught up.

If you’ve tried communicating with your mortgage lender and asking for a loan modification and your lender still won’t help you, then it’s time to start seriously considering filing chapter 13 bankruptcy to get your home loan modification that you’ve really only been asking for. You don’t have to be ashamed to file for chapter 13 bankruptcy, either, because you are still paying your debts, you are just asking for legal help to get the time you need to repay them. There is less shame in getting help to keep your home and modifying your loan than there is in walking away from your situation because you gave up.

To lower your rate, remove your late payments and stop foreclosure, contact a Bankruptcy Loan Modification professional to find out if this choice is right for you.