Opinion on foreclosure or bankruptcy?
Sep.18, 2009 in
Bankruptcy
Ok ineed an opinion about foreclosure or bankruptcy. I bought a house 21 months ago and theres a prepayment penalty that will expire this april 2008. We paying a whopping 00 for a 5,000 loan, and there’s no equity on the house. We dont have late payment, but lately were having a hard time producing that money. I call my lender and I ask for loan modification and they said I have to be late in order to modified the loan. My question is what is my best option beside modification? I’m planning to do foreclosure cause we think that its cheaper for us to rent an apartment. What is short sale? Can we sell the house even though I owe more than its worth? or shall we just file a bankruptcy?
September 18th, 2009 at 5:14 am
First of all, list your home for sale. Most lenders won’t discuss a short sale until your home has been on the market for 90 days. That’s a sign of good faith that you’re trying to sell your home. If you receive an offer take it to your lender. Most lenders want you to be 30 days late on your payment before they’ll discuss a short sale but I’d still try. Most lenders will accept and offer of 75% of your mortgage amount without much fuss or muss.
Also, shop for apartments or rental homes in your area. See if it is truly cheaper.
Also, the president signed a bill stating that the mortgage companies can’t go after you for the difference between the sale amount and the amount of your mortgage.
But, a Bankruptcy is not so easy anymore. You used to be able to discharge all of your debts and start over with a clean slate–however now there are financial counseling hurdles you have to go through and expensive repayment plans (and lots of attorney fees).
I’d choose foreclosure over bk any day.
Talk to your lender and they’ll have some options for you. They might even look at voluntarily reducing your payments for several months…they have all sorts of power to help you save your house. All you have to do is ask. If possible, ask to speak to their "loss mitigation" department. Those guys have the power to move mountains…they aren’t phone answering zombies.
Good luck.
September 18th, 2009 at 5:14 am
I read on CNN Money that you are better off foreclosing that filling bankruptcy because foreclosure goes off your credit faster. Is there anyway to save that, can someone get a second job? I know it sucks and all but you gotta do what you gotta do right? Maybe when we come out of this recession you can sell then and not damage your credit so much. We have hit some hard times too and we just buckle down and get through it, it stinks but it can be done.
September 18th, 2009 at 5:14 am
Just a thought from a non-expert: foreclosure won’t happen until you stop paying. If you miss a payment, wouldn’t that make you “late?” Then you might meet your lender’s requirements for loan modification. If you’re going to let foreclosure happen, you might as well give it a try.
A short sale is a situation where the lender accepts a sales price that is less than you owe. So if you owe 345,000, and your house sells for $300,000, the lender doesn’t make you cough up the difference. What they can do is force you to claim the difference as income when you file taxes next year. In the government’s eyes, the bank’s loss is your gain and you may have to pay taxes on it.
September 18th, 2009 at 5:14 am
Shop around for another mortgager first and ask about refinancing. It’s going to be difficult due to the poor market right now, but you never know….. Sit down with your financer and REALLY discuss this. Show them your paperwork-bills, income, etc. Show them how/why it’s becoming difficult for you to scrounge up the home payment right now. Financers don’t want you to foreclose or go bankrupt. They’ll only get out of the property what the market will support. People don’t realize how much money a lender will lose on a foreclosed home-not just the difference between the $ you owe and what they get from re-selling it, but they have realtor fees, property taxes, attorney fees, the list is endless….
Yeh, I’d go foreclosure as opposed to bankruptcy if it comes down to that. A foreclosure would come off your credit quicker. If I’m correct, didn’t the bankruptcy laws change again and there is no "forgiveness", meaning that the slate is no longer wiped clean and all debts discharged. Now, the debts are reduced and the individual is still expected to pay off a portion of the debt. However, with foreclosure, the lender could still come after you for the difference between what the property is sold for and what you owe. Nasty either way.
September 18th, 2009 at 5:14 am
Lots of people think that once they’ve filed for bankruptcy they will be unable to ever get a loan again, and ultimately they are unable to do anything financial ever again. This isn’t always true, there are<!–always ways to improve your financial standing, and there are also ways to repair your damaged credit rating.
http://best-loans.awardspace.com/Bankruptcy.htm
In fact one of the best ways to improve your credit rating is to refinance your home mortgage, this–>will help to improve your credit history in a number of different ways.
September 18th, 2009 at 5:14 am
Foreclosure is your best bet, not bankruptcy, it is so much harder these days to get your life together after you file bankruptcy. With the recents changes in regulations concerning bankruptcy, it will take many years to back on track. Just a suggestion, but you can find some answers to your questions by visiting the site below.