If you had to choose between Chapter 13 Bankruptcy and Foreclosure, which would you choose and why?
My main concern is to understand as much as I can before my wife and I make this decision. My concern is to understand if there is a difference during the rebuilding credit phase between each one? From a lender’s perspective which would they rather see, and why? How soon after each would a lender consider an owner occupied loan and a non owner occupied loan assuming everything else is "perfect"? And if you’ve filed Chapter 13 in the past how much does it cost?
Pick the bankruptcy.
Perks:
- keep ur house longer (payment free i might add)
- there are lenders who will lend u money the day after it’s discharged for an owner occupied single family residence.
The Bad:
- U now have a bankruptcy on ur credit that is difficult at best to get off, but not impossible.
Pick the foreclosure
Perks:
- none foreseeable to you, but the bank will have possession sooner so they can then unload their liability at an auction.
The Bad:
July 19th, 2010 at 7:00 pm- U now have a foreclosure on ur credit that is extremely difficult to get off
- There are no lenders willing to lend money to buy an owner occ. single family residence the next day. You may be required to wait 2yrs before a lender will accept credit w/ a foreclosure.
- Lenders cringe when they receive a file w/ a foreclosure on the credit.
Chapter 13 might mean you can keep your house. You pay an attorney to file and then your bills are paid or partly paid over the next few years. If you fail you still have the bankruptcy on your history and it will be there forever. If you can’t keep your house try to get a short sale instead of foreclosure.
July 19th, 2010 at 7:00 pmThe costs of filing chapter 13 veries from state to state. There are pretty tough laws concerning chapter 13 thanks to baby bush helping his banking buddies. However if you have not filed before I will tell you to go agianst conventional wisdom and definately file. They say it takes 10 years to leave your record. My oldest brother filed and 6 years has bought 2 new autos and is loooking to buy a house. The way back was simply getting everything discharged then getting a secured credit card gaianst a savings account. He used the credit card up to 1/3 of his limit and paid it off in 7 months. they then at about 1 year gave him a unsecured credit card. and it improved from there.
On the other hand my other brother tried and is still trying to pay off his debt without bankruptcy. He can not get any car loans and must rely on his income taxe refund to update his car or even a computer.
Remember the banks will tell you anyhting to enslave you in debt. EC Nobody
July 19th, 2010 at 7:00 pmNeither are good…but your situation is what it is. Before this mortgage fiasco you could get another mortgage 1 day out of a bankruptcy or foreclosure…but those programs no longer exist.
If you are having problems not only with the mortgage payments, but all other consumer debt then the BK is the lesser of two evils.
Whatever way you choose it is imperative that you re-establish credit ASAP. Most people tend to shy away from accumulating more debt after a BK, but I know from experience that prospective lenders want to see a credit history afterward.
BE FOREWARNED…do not take on more than you can handle….you must show a clean record…with no lates for at least two years!!! Also if a bk is filed YOU must ensure that your credit history reflects all debts listed in the schedules show "included in bankruptcy" with zero balance. Your attorney will not get this done nor will the creditors.
I do not envy your decision…good luck to you both.
July 19th, 2010 at 7:00 pmIf you go bankrupt, file your bankruptcy under Chapter 13. Chapter 13 permits an US resident to reorganize and restructure their finances. It allows you start afresh and get your finances back on the track. The bankruptcy court will supervise and authorize the entire process of overhauling your financial situation.
While filing for bankruptcy under Chapter 13, you have to draw up a plan of action meant to pay your dues within the next 3 to 5 years and submit to the bankruptcy court. You should clear your dues as much as possible at frequent intervals. Filing under Chapter 13 will protect you against the undue pressure exerted on you by your lenders to pay your debts.
July 19th, 2010 at 7:00 pmhttp://get-out-of-the-debt-trap.com/category/Information-on-Chapter-13-Bankrupt.html
We are going throught this as I write…
July 19th, 2010 at 7:00 pmWe filed a Chapter 13 last year at this very time….
I can tell you, we have and had ALWAYS been current on our mortgage, and vehicles, but we were never going to see the light with CC debt.
We went to see an attorney (usually the first consult is free, it was), and because we both have good jobs, the law requires now that you have to file a chap 13 to pay back most or all of your debt. I don’t have a problem with that, I feel I should!…
Our Credit score was perfect, until we filed, but since then, and it’s only been a year, we have been surprised at how our score has gone UP!, it never got that low in the first place, which shocked me…..but I would NEVER recommend foreclosure….. I look at it this way….at least I am paying 100% of my debt, if anyone wants to balk at that after I’m through with my chap 13 and won’t give me a loan if I needed it, piss on them….at least I paid back my debt. I have paid on those cards for years, so they GOT their interest and then some….all of them have filed, so ALL of them are getting their money….it will be a long 4 yrs left for me to pay this, but I feel it is all I can do, and still hold my head up. We did NOT get into debt intentionally, but lots of things have happened over the years, and my intent was gettting them paid off, but it wasn’t working, now it is…I see a light at the end of a tunnel…but no..I would NEVER let my home go into foreclosure…that’s an easy way out, and no creditor will honor that when you come in for a loan…they might, but you will pay interest out the wazoo….
I have to always admit on a loan app that I filed for a 13, but you better believe right after that "yes", I will be putting "paid 100% payback of chapter 13" ….hopefully, I will NEVER have to borrow again, it is my sincere belief that I will never ask another bank for a loan…..I intend on using CASH always from here on…CC companies will SCREW you from one side to the other….this I know I AM EXPERIENCED……..
good luck~
hope it helps~
TinaB