Should I Declare Bankruptcy If I Own A Home?
By Jeffrey Paulsen on March 22, 2010, 10:18 pm Posted in Finance NewsThe recent economic problems have made it difficult for many homeowners to make ends meet. Unfortunately, some are forced to consider bankruptcy as a way to make a fresh start. Declaring bankruptcy can be a good option, but if you own a home, is it the right option for you? In order to answer that question, you should consider the pros and cons of the two kinds of bankruptcy; chapter 7 and chapter 13.
Chapter 13 Bankruptcy: Reconfiguring Your Debt
Chapter 13 bankruptcy is a way to consolidate your debt into a more manageable single payment.Most people who file for bankruptcy are behind on their mortgage payments and many are at risk for foreclosure. Chapter 13 allows you to keep your assets, including your home and pay a monthly payment that includes the arrearages, for a period of three to five years. Chapter 13 is a good option if you’ve simply had a stretch of unexpected debt and have fallen behind. It can make the debt manageable and allow you to keep your home, while catching up on the mortgage payments.
Chapter 7 Bankruptcy: Liquidating Debt
Chapter 7 bankruptcy is basically a choice of last resort. It is the liquidation of large assets and discharge of debts. If your home is already in foreclosure, chapter 7 will not prevent it, although it will delay foreclosure proceedings until the bankruptcy is final. That being said, you can work with your mortgage lender to catch up on your mortgage payments while there is a delay in foreclosure and you may be able to keep your home. The lender has the option, based on your equity and payment history, to allow you to avoid foreclosure and keep your home. In some states, you may have to reaffirm the debt with the lender.
The Bottom Line About Bankruptcy
If you are asking yourself “Should I declare bankruptcy if I own a home?”, consider the options and consequences of each kind of bankruptcy. You may be able to keep your home and finally catch up in your mortgage payments. If your debt is debilitating, liquidating your assets, including your home, might provide you with peace of mind and a fresh start.
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- What’s The Latest Chapter 13 Bankruptcy Information?
- How To Declare Bankruptcy Steps Made Easy
- Little Known Tips On Chapter 13 Bankruptcy Rules Decisions
- What Is Chapter 11 Bankruptcy And How Does It Work?
- What Happens When You File Bankruptcy Made Easy
