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Avoiding Bankruptcy to Save Your Home
By Susan Willets | June 11, 2008
Should You File Bankruptcy?
Filing for bankruptcy is a major decision that requires looking closely at your current financial situation as well as predicting your future finances. This requires examining all of your options, testing a new budget, creating a list of bills and payments both current and future, and weighing the consequences with the solutions you are hoping the bankruptcy will bring. Ultimately, if there there will be no change and you will still have financial difficulties after the bankruptcy, why go through all the hassle?
Alternatives to Bankruptcy
Creating a New Budget: Make a list of all of your payments that you make each month. Include your mortgage, car payments, and all living expenses you currently pay. Do NOT include payments such as credit cards and/or other debt from credit. Now, with the money left over would you be able to pay off your additional debt in 3 years? If the answer is yes, then you can avoid filing for bankruptcy!
Consumer Credit Counselors (”CCC”): If it would take you longer than 3 years to pay off the debt, consider contacting a CCC to help assist in creating a repayment plan and working with lenders to reduce or eliminate interest while you are repaying your debt. Beware of scams and extra costs - you may want to check with several companies to find out their “service fees” and also check with the Better Business Bureau for the legitimacy of the company you are looking to work with.
How to Save Your Home During Bankruptcy
There are two major types of bankruptcy, Chapter 7 and Chapter 13. Both options have their advantages and disadvantages and different effects on keeping your home. Be sure to talk with your lawyer before taking any action to find which option would be best for you. See Filing Bankruptcy: Chapter 13 vs. Chapter 7 for more information on how you can save your home.
Topics: Bankruptcy and Foreclosure |