money sectionmoney section
When lenders provide debtors with money to purchase homes and other real property, the lenders generally reserve the right to foreclose and thereby seize and sell property purchased with the loan proceeds. Bankruptcy stops mostly all collection-related activities, including foreclosure. Bankruptcy also allows debtors to obtain relief from obligations remaining after the lender forecloses on the debtor's property.
Serious credit situations, such as a bankruptcy and foreclosure, can cause significant credit damage and negatively impact financing options. Several factors can increase the chance of bankruptcy and foreclosure. But fortunately, recovery is possible wherein you can fix your low score and obtain future credit.
The ultimate goal of bankruptcy is the discharge. A bankruptcy discharge is a court injunction that prevents creditors from forever seeking to collect a debt from you, and is entered by the bankruptcy court at the end of the bankruptcy process. If a debtor is appointed as an executor of a will prior to the bankruptcy discharge, the interest and power of the debtor as an executor may become property of the bankruptcy estate and the bankruptcy trustee.
Bankruptcy law has a long history in the United States. The founding fathers included bankruptcy in the Constitution, authorizing Congress to establish uniform bankruptcy laws that apply to all 50 states, preventing debtors and creditors from racing to file cases in the state whose law favored one side or the other. The purpose of bankruptcy law is to give debtors a fresh start without the burden of excessive debt. The U.S. Bankruptcy Court administers the bankruptcy process and rules on disputes among debtors and creditors.
A "final judgment" is a written order signed by a judge at the end of a lawsuit. The final judgment makes a judicial determination of all issues in the lawsuit, which generally means the final judgment requires one of the lawsuit parties to pay a certain amount of money as damages to the other lawsuit party. Bankruptcy can reduce or eliminate the payment obligation under a final judgment.
The single biggest risk in falling behind on your mortgage loan is that you may lose your home to foreclosure. Every state in the U.S. has enacted laws that allow mortgage lenders to foreclose when a borrower defaults on the mortgage loan. The technicalities of how foreclosure works vary from one state to another, but in the end, foreclosure results in the sale of your home to a new owner.
Determining which is a better deal -- foreclosure or bankruptcy homes -- may present a challenge if you are new to real estate investing. Although some investors have acquired these distressed properties at deeply discounted prices, that is not always possible. Getting the best deal depends largely on the particular lender, the stage of foreclosure the home is in or being in the right place at the right time.
A person deemed an undischarged bankrupt is someone who has filed for bankruptcy but has not received an order of discharge. An order of discharge signals that the bankruptcy proceedings are complete and the person's debts have been erased.
Generally, your payment history with lenders has the most influence on your credit report when determining credit scoring. Late payments do damage your credit score, but not paying debts at all lowers your score and significantly reduces your creditworthiness with would-be lenders. The negative influence of bankruptcy or repossession depends on other information on your credit report and your starting score.
A personal bankruptcy filing and a foreclosure on a property are two events that have a major impact on your credit rating. You may be debating if you should file for bankruptcy to try and save your home from foreclosure, and wondering if it would be worse on your credit to show the bankruptcy, or just to proceed with the foreclosure. This is not a decision to be made lightly, and you should consider all of the facts before proceeding.
When foreclosure is an inevitability, filing bankruptcy can delay the process, possibly giving homeowners time to regroup financially and catch up on missed mortgage payments. While the stay of foreclosure will delay or stop the process, it may only be a stop-gap measure, depending upon your financial prospects.
When you stop making payments on financed property, the lending institution that holds the loan can seize the property through foreclosure or repossession. Foreclosure refers to real estate seizures. Repossession applies to any non-real estate item you financed that was subsequently seized. The term, however, is most often used to refer to seized vehicles. Both foreclosure and car repossession are financially and emotionally damaging, but in some situations one is worse than the other.
If you miss your mortgage payments and your lender forecloses on your property, the lender sells your home and uses the money to pay off your outstanding loan amount. However, if the sale proceeds don't cover your debt, your lender may get a deficiency judgment against you to collect the remaining amount.
Bankruptcy is a last-resort option available for getting out of debt. Once you file, your bankruptcy gains either undischarged or discharged status. Undischarged bankruptcy is defined by looking at the activity the court has taken on your bankruptcy case, as well as your ability to proceed financially and in your career.
Foreclosure presents many risks. It is not possible to "file" for foreclosure, although some people voluntarily walk away from their homes through what is known as a strategic default. Strategic defaults occur when people weigh the pros and cons of foreclosure and decide to walk away even if they are capable of making the payments. They may be unhappy with the neighborhood or disappointed that their home has dramatically declined in value. Some homes purchased at inflated prices during a strong economy can lose a third or even half their value during a recession.
Getting rid of your house in bankruptcy can be accomplished, although most people with mortgage difficulties file for bankruptcy in an attempt to keep their house. You should not choose bankruptcy if getting rid of a house is your primary objective. Regular foreclosure outside of bankruptcy can accomplish that, allowing you other options short of bankruptcy for addressing other credit issues.
One out of every five people who went through prebankruptcy counseling in 2009 considered bankruptcy to prevent foreclosure, according to data from Consumer Credit Counseling Services of Greater Atlanta. Bankruptcy can help you keep your home if you find yourself having problems making your mortgage payments, but it comes with a price.
One in every 497 housing units in the U.S. received a foreclosure notice in January 2011, according to RealtyTrac, a foreclosure listing company. Between March 31, 2009, and March 31, 2010, over 1.5 million Americans declared bankruptcy. Foreclosure and bankruptcy bear no legal relation: just because you declare bankruptcy does not mean you will go through foreclosure. However, if you cannot pay your bills in general, you probably also cannot afford mortgage payments. Educate yourself on both of these legal terms so you can keep your home.
If you are a homeowner finding yourself barely keeping afloat financially, you may have concerns about potential foreclosure. In Maryland, the entire foreclosure process takes approximately 45 days. A short foreclosure period leaves you little time to explore possible solutions. Assistance is available to help Maryland homeowners who act fast.
Foreclosure is not the apocalypse. In comparison to bankruptcy, foreclosure offers a range of financial benefits. Whether you get a better deal filing for bankruptcy or allowing a lender to foreclose on your home depends on your financial priorities. Neither option will give you complete immunity to financial setbacks. Choose from the lesser of many evils associated with foreclosure and bankruptcy.
Filing bankruptcy can help you avoid foreclosure. However, bankruptcy is not an easy way out. When making the decision between bankruptcy and foreclosure, compare the consequences of each option to ensure you fully understand the decision. Early research can help you prepare for lifestyle changes once you file for bankruptcy or endure foreclosure.
Many homeowners who are in debt and can no longer pay their mortgages may find themselves trapped between a foreclosure and a bankruptcy. A foreclosure is a legal action taken by a lender so that a court will seize the homeowner's house and sell it to pay back the lender's mortgage. A bankruptcy puts control of debts into the hands of the homeowner and creates an immediate stay on the foreclosure, allowing the homeowner to stay in his house, at least until the bankruptcy is completed. This does not mean that a bankruptcy is always a better choice than a…
Bankruptcy and foreclosure both have a significant impact on a person's credit score. Most people are able to recover from the damaging effects over time. However, military personnel face an added stress. Not only does bankruptcy and foreclosure destroy their credit, it can also affect their employment and future in the military.
Homeowners facing foreclosure can use bankruptcy as an option to temporarily delay or even prevent the foreclosure. Along with bankruptcy comes credit consequences, however. It is important to fully understand how bankruptcy will impact you. If you are considering filing bankruptcy, a mandatory pre-bankruptcy counseling course must be completed at least 180 days prior to filing the bankruptcy petition.
If you are 30 days or more delinquent with your mortgage payment, you have entered a phase known as pre-foreclosure, which is the first step in the foreclosure process. If you fail to respond to notices received, or otherwise neglect to contact the lender in the pre-foreclosure phase, the lender will begin formal foreclosure proceedings, take ownership of your property and sell it to pay what you owe. Bankruptcy may present a viable alternative for some borrowers.
Deciding between foreclosure and bankruptcy is a deeply personal decision that you should make only after consulting with a nonprofit credit counselor as well as real estate and bankruptcy attorneys. Every situation is potentially different, with foreclosure best for one person and bankruptcy better for another. Generally, foreclosure is the better option if the mortgage debt is your only financial issue and you are comfortable with losing your home to eliminate the debt. Bankruptcy may be better if you have a host of financial problems and you would like to sort them out while avoiding foreclosure through bankruptcy.
Foreclosure and bankruptcy are mutually exclusive events. Your home can go into foreclosure without you having to file bankruptcy and vice versa. You should avoid both if possible. foreclosure is not as bad as bankruptcy, but the fact that you defaulted on your mortgage and lost your home is not viewed favorably by lenders, according to Experian.
Anyone who qualifies can file a bankruptcy, and you cannot stop a person from doing so. Once someone files a bankruptcy case, you may, however, have the right as a creditor to prevent him from discharging your debt.
Bankruptcy is an unfortunate reality for many Americans--over 1.5 million bankruptcy filings were entered into the U.S. court system between October 1, 2009, and September 30, 2010, according to the BankruptcyAction website. Because bankruptcy has such an impact on your finances, credit history and relationship with creditors, it's important to understand what an undischarged bankruptcy means.
Bankruptcy is far worse for your credit score and personal finances than car repossession. The Federal Trade Commission considers bankruptcy the most negative credit event possible, and the information appearing on your credit report after a bankruptcy is the most severe possible. Bankruptcy information remains on your credit report for a minimum of 10 years, while a car repossession will be reported for seven years.
When an individual falls deep into debt, he may choose to file for bankruptcy. This bankruptcy, if approved, will afford the individual a measure of indemnity from creditors and will allow him to discharge a number of debts. While bankruptcy does offer considerable legal protections, it does not protect the person from being charged with an applicable criminal offense. A person can still be convicted of fraud, whether stemming from his debts, the bankruptcy or another matter.
You may think that recovering from bankruptcy is impossible, as your credit score goes down and many lenders will not extend credit to you. Yet, bankruptcies don't last forever and, with time, you can boost your poor credit rating and fully recover.
In 2009, 5.4 million Americans were behind -- called default -- on their mortgage payment, but as many as 20 percent of them were "planned," according to the Wall Street Journal. This happens because it can be in a homeowner's best interest, financially and for a credit score, to walk away from a home rather than struggle to make monthly mortgage payments.
Struggling homeowners who have exhausted all options to prevent foreclosure can consider filing bankruptcy. Although bankruptcy is often used to stop foreclosure, it is not always a permanent solution. Homeowners can choose to keep their home or start over with a clean slate. Regardless of the decision, there are always certain consequences associated with bankruptcy.
Bankruptcy is a common method used to stop foreclosure. After filing either Chapter 7 or Chapter 13 bankruptcy, an automatic stay is issued. The automatic stay requires creditors, including your lender, to cease collection activity immediately. Whether you decide to keep the home or not, bankruptcy can provide you with the extra time needed to get your finances in order.
Chapter 7 bankruptcy is one of simplest forms of bankruptcy, and it is also one of the most powerful. Chapter 7 can stop a judgment, but it has even broader powers. Chapter 7 can completely eliminate the judgment and other secured debts in only a few months. Other forms of bankruptcy, such as Chapter 13, aren't nearly as fast, with Chapter 13 requiring a payment plan over three to five years, according to legal website Nolo.com.
Although a creditor may attempt to record a judgment to take a lien in other property, you can discharge most deficiency judgments in bankruptcy.
Creditors seek remedies through the court system when a debt remains unpaid for an extended period of time. The court issues a judgment against the person when the creditor wins the lawsuit. Some creditors use that judgment to put a lien on the person's house or start garnishing the person's wages. Whether bankruptcy can offer relief depends on the facts of the case and the classification of the debt within the U.S. Bankruptcy Code.
About 20 percent of people filing bankruptcy do so to avoid foreclosure, according to Consumer Credit Counseling Services of Greater Atlanta. Bankruptcy will save you from foreclosure, but it may not stave it off forever. Ideally, mortgage holders should use bankruptcy as a tool to help them get back on track with their finances, not as a permanent solution to money woes.
Bankruptcy and foreclosure are two unpleasant events that can happen due to financial hardship. You can get a stain on your credit report that causes your credit rating to plummet. On the other hand, bankruptcy and foreclosure can relieve financial burdens, thus ending great financial stress. If you're facing these events, you should understand how they work and the differences between them.
An investor can purchase a house after a foreclosure, possibly for much less than the price of other homes in the neighborhood. Foreclosed houses are often sold at auctions, so the price of the house can vary depending on how many other bidders show up. The main problems with the purchase of the foreclosed house are liens and other encumbrances on the house which may still be present after the sale, and the cost to renovate and repair the house.
When an individual has an asset repossessed by a creditor or undergoes a foreclosure, the financial damage sustained by the individual goes beyond the loss of property. In many cases, the individual may face additional debts related to the costs incurred by the creditor in the course of the repossession and the foreclosure. In addition, the individual may see a drop in his credit score, making it harder for them to take out loans at reasonable rates.
Filing personal bankruptcy stops harassing phone calls from creditors and gives you the chance to wipe out your debts and make a fresh start. While you're no longer liable for debts after a bankruptcy, this process ruins your personal credit score. A low score can stop you from getting a mortgage loan or auto loan in the future. Thus, it's smart to rebuild your credit score and recover after a personal bankruptcy.
Leaving a debt unpaid places you at risk of a lawsuit from your creditor. Should the creditor win the suit, the judge will grant it a judgment. Judgments allow creditors to recover debts through garnishment and property liens. Bankruptcy is one option some individuals use to stop lawsuits before a creditor can obtain a judgment.
When you are having money problems, options like foreclosure or bankruptcy start to become realities. While no one wants to go through either one, sometimes you have to choose one over the other. If you are looking at the decision from a credit standpoint, bankruptcy will do more harm almost immediately.
The best way to release yourself from the obligations of a mortgage without going through foreclosure or bankruptcy is to conduct a short sale or simply sell the house. A short sale means selling the home at a loss, when the total value of the home is less than the outstanding value of the mortgage. Once you sell the home, you can use the funds to pay for the mortgage, either eliminating it or reducing the principal to a manageable amount.
Bankruptcy is not a guaranteed solution for preventing home foreclosure. Filing for bankruptcy will certainly allow you some extra time to figure out your finances by delaying the foreclosure process, but it is generally not a long-term solution to prevent foreclosure. Foreclosure prevention ultimately requires bringing the mortgage current, even if you file for bankruptcy.
Bankruptcy and foreclosure are both events that could completely change the outlook of your financial life. While bankruptcy is more damaging than a foreclosure, there are situations when either of these debt solutions could benefit you. Bankruptcy could potentially eliminate all of your debt, while foreclosure eliminates only your mortgage debt and forces you to find a new home.
Filing for bankruptcy provides automatic and complete, but temporary, relief from all collection activities by creditors. This includes foreclosure actions by mortgage lenders. Without express approval from your bankruptcy judge, a mortgage lender cannot carry out foreclosure, or sue you for foreclosure, after you file your voluntary bankruptcy petition.
If you can't pay your mortgage, filing for bankruptcy can be a way of either delaying or avoiding the loss of your home. What it won't do is remove a foreclosure, nor a history of late payments, from your credit history.
Situations such as a bankruptcy or foreclosure can devastate your credit rating, and it can take years to recover from the damage. During this time, you'll likely experience a few loan denials or you may acquire higher interest rates on credit cards. While both situations are bothersome, bankruptcies and foreclosures do not last forever. Both remarks are deleted from your credit report within ten years (seven years for a foreclosure). Fortunately, you do not have to wait ten years to recover. There are ways to recover from a bankruptcy and foreclosure sooner.
Buying a home is a very challenging task, and it's even more challenging for buyers who've gone through a foreclosure or declared bankruptcy. If you've had financial hardships in the past that led to the foreclosure of your home, the need to declare bankruptcy or both, you can still purchase a home. It will be a bit more challenging for you than it is for people who've never experienced such hardships, but foreclosure and bankruptcy can happen to anyone. You shouldn't let your financial past stop you from buying a new home.
If faced with the overwhelming dilemma of deciding to file for bankruptcy and foreclosure on your home, it becomes important to understand what the consequences in filing for chapter 7 or 13 bankruptcies mean to you before you foreclose on your home.
You can expect to see most major accounts that you are responsible for, such as your mortgage loan and credit cards, appear on your credit report. When you are unable to pay your debts and forced into foreclosure or bankruptcy, that fact will appear on your credit report as well.
The laws in most states permit a mortgage lender the ability to obtain a deficiency judgment in a foreclosure case. A deficiency is the difference between the outstanding balance on the mortgage loan in foreclosure and the amount of money recouped through a foreclosure sale. The court grants the lender judgment for this difference, a judgment the borrower is responsible for paying (with interest). Bankruptcy protection can provide a borrower relief from a deficiency judgment.
If you are feeling financial stress, you might want to file for bankruptcy or your lender could foreclose on your property. Both have advantages and disadvantages. Choose the scenario based on your goals and objectives.
The goal of every bankruptcy filer is to secure a successful discharge, whether they chose a Chapter 7 liquidation or a Chapter 13 restructuring. The period of time while the court is finalizing the case offers bankruptcy protection, but legally the case is still an undischarged bankruptcy. A discharged bankruptcy is permanent absolution of the involved debts.
