The economic condition of our country seems to by spiraling downward, the news continues to get worse. Housing has declined rapidly and there seems to be no end in site. Oil continues to hit its news high's, day after day. So, what is one to do when faced with certain bankruptcy or foreclosure? The answer may sound easier said than done, but the answer is to avoid it.
Avoiding bankruptcy is something that should be executed at just about all costs. In the past bankruotcy was the easy way out. You could find an economical attorney specializing in bankruptcy that could get you filed for a modest cost. This would wipe your debt away, so you could start a new. Unfortunately, that's the mind set in this country, we're always looking for the easy way out. Well, thanks to the new bankruptcy laws, it's no longer that easy.
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The new bankruptcy law makes filing for Chapter 7 due to minimum income levels. This means that if you make more than the median (which isn't very much) you can no longer file for Chapter 7 bankruptcy, and must file Chapter 13 bankruptcy. Chapter 13 requires debtors to repay their debt through a restructuring program. This is commonly set up for approximately a 5-year period. Nothing you couldn't do with a debt consolidation program.
Now, most peoples thinking in the past was to just file for bankruptcy and remove all debt through bankruptcy, but now they have to pay it back. With this incentive gone, avoiding bankruptcy should become a priority for debt troubled individuals. The other way of thinking was that the bankruptcy would be removed form their record after a 10 year period. So, many individuals figured they could do their time, so to speak, and after the 10 years they'd be free of any bankruptcy scars. This is true, however bankruptcies never really leave you, employers and the like can ask if you've EVER filed for bankruptcy. Avoiding bankruptcy should be an absolute priority for you; otherwise it will haunt you for life.
Similarly, foreclosures are picking up steam, due to the recent housing crises we've been going through. While foreclosure doesn't have the same consequences as a bankruptcy, it is still a rather painful financial consequence that should be avoided. If you want to stop foreclosure there are a few steps you can follow. At the first site of trouble you should contact your lender. Your lender wants to work with homeowners facing bankruptcy; it doesn't do them a bit of good to you to foreclose. This is why they are willing to work with you, as it will cost them substantially if you end up foreclosing. They maybe able to work out a better payment system, interest rate reduction, or the like. Or if you simply can't afford it at all, they maybe able to work out a short sale situation, where your home is sold for less than you owe and your debts forgiven.
The numbers show that for those that are proactive and try to work with their lender are much more likely to stop foreclosure. Do all you can to stop foreclosure and you could save your credit and live to fight another day. In some cases you may just have to walk. If you're upside down several hundred thousand dollars, your lender won't work with you, and you don't have the income to support this decline asset, sometimes foreclosure may seem like the only likely answer. But, don't just give up, work with your lender, be proactive and try to save your credit, you'll be happy you did. Remember that the current real estate landscape has got mortgage lenders hemorrhaging. They want you to stop foreclosure about as much as you do, as your foreclosure will cost them much more than if you both worked something out.
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