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What You Need To Know About Refinancing With A Bankruptcy
When a person finds it impossible to pay their bills, they may file for bankruptcy. Bankruptcy halts all attempts by creditors to seek payment for all debts listed in the court agreement. It is a new financial beginning, no debt, no credit history - except the bankruptcy. A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems. Bankruptcy is a difficult and personal decision; but by choosing bankruptcy, you could avoid worsening an already problematic financial situation. To refinance with a bankruptcy is possible according to HUD.
Bankruptcy will assist in dealing with a variety of financial difficulties, but the effects are not permanent. If you do decide to file for bankruptcy, take full advantage of the new financial start you will be offered, and make your future borrowing decisions with more caution. Please note that Peak Home Loans are experts at getting our clients the hassle-free, low cost, easy approval on loans with prior bankruptcies. Another thing to remember, most people have better credit than they think, at least Far Credit, keep this in mind while filling out our online form. When contacted by us, kindly ask our loan professional any question you may have. They will be more than happy to assist you obtaining a mortgage or refinance after a bankruptcy. Remember, all loans don't fit all people; if you need a mortgage loan, we'll find the right one for you.
You can refinance your home with a sub-prime mortgage lender before, during, or after Chapter 13 bankruptcy, or the first day after a Chapter 7 bankruptcy concludes. You can refinance your home with an FHA loan 1 year after filing a Chapter 13 bankruptcy. For all refinancing after a bankruptcy, you will need to show proof that you were making your payments on time every month, including your mortgage payment. Your mortgage must also be current. A low credit score should be Ok. You may only be able to borrow up to 70% of your home's value.
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How Can Bankruptcy Help?
Bankruptcy can make it possible to:
- Eliminate, or "discharge", most of your debt allowing you to "start over" financially.
- Delay, for a time, a foreclosure on your home.
- Stop a car repossession, or have a car returned to you that was already repossessed.
- Put an end to wage-garnishment. Stop harassing debt collectors.
- Get your utilities turned back on, or prevent them from being turned off in the first place.
- Dispute fraudulent creditors' claims, and those claims in excess of what is actually owed.
What Bankruptcy Cannot Do?
Bankruptcy does not solve all financial problems. Bankruptcy cannot:
- Allow you to indefinitely keep certain types of "secured" property, i.e. automobile loans, and home mortgages. You may be able to delay repossession, but not forever.
- Eliminate debts that have been court ordered by the bankruptcy judge, i.e. most taxes, alimony, child support, student loans, restitution ordered by a court, and divorce decrees.
- Stop creditors from attempting to collect from co-signers of your debt. You may be off the hook, but your co-signer is not.
- Get rid of additional debt accrued after the bankruptcy filing.
- Keep your pension fund and / or IRA.
When Should I Consider Bankruptcy?
Bankruptcy should be considered when:
- You are unemployed with little hope of getting a job.
- You find it impossible to pay your bills on time.
- You are thinking about using your MasterCard to pay your VISA, or vice versa.
- You are facing foreclosure.
- You may have you automobile repossessed.
- Your automobile has been repossessed.
- You are thinking about taking out a loan on your home, a home equity loan - or line of credit, to pay your bills.
- You are thinking about using your IRA to pay bills.
- You want to protect the assets you have.
- You have a law suit filed against you.
- You have IRS problems.
- The harassing letters and phone calls get to be too much.
Certain people can get a handle on their debt through credit counseling services that are easily accessed online. They can help consolidate your debt into one lump sum requiring a single, lower monthly payment, than paying bills separately. The better ones have the expertise to obtain extensions, lowered balances, lower interest rates, and lower monthly payments for you.
You can also don'thing - don't file for bankruptcy and don't seek credit counseling. However, you may run the risk of judgments being levied against you. And certain states may allow these judgments to be satisfied by taking money from a bank account, or putting a lien on real and personal property. But, judgments cannot foreclose on your homesteaded property, not can they garnish wages.
So, basically you have three ways to handle mounting debt - file bankruptcy, seek credit counseling, or simply don'thing. It is your personal choice.
Types Of Bankruptcy
There are five types of bankruptcy:
- Chapter 7 - Or "straight" bankruptcy. The debts will not be re-paid. Maybe the most common form of bankruptcy, according to Wikipedia.com.
- Chapter 9 - A city would use this to reorganize their debts with the intention of repayment.
- Chapter 11 - Business reorganization for companies overburdened with debt. These debts will be repaid.
- Chapter 12 - Farmers use this to reorganize and repay their debts.
- Chapter 13 - This is for people who are able to repay their debts, but need to reorganize them.
How Can I Learn More About Bankruptcy?
You could visit your local public library, or go to your nearest courthouse - you can usually find a public law library there. There is also a book available from the US Court System, entitled "Bankruptcy Basics." By clicking here, you can visit their site and read or print the pamphlet. You will find that bankruptcy is a serious and intriguing subject.
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