Posted: Tue Nov 06, 2007 9:30 am Post subject: Mortgage vs. forclosure question
My credit is good. I was divorced and spouse ordered to make mtg payments until house sold. He did not, he left the country. I've been using savings to keep it up until now. I have no more savings. In the meantime I have talked to HUD and while I'm sending in a mitigation pkg back to the mtg co, I cannot make this months payment (Nov 07). I've talked to atty's and financial advisors with no luck. The market for selling in Fl is sooooooo bad. My house has $150,000 in equity and it won't sell. Were trying to force a short sale, anything. Here's the kicker: I work where I see forclosures all day long and we know the banks don't want the houses but if you have no money, then what? My last chance is to figure out whats best for my credit. I'd like to speak with a bankrupcy atty to ask what looks better on your credit if you want to buy or build in a couple of years, forclosure or bankrupcy. My thought is bankrupcy instead of forclosure. I would not be in this position if the spouse did what he was ordered to do. Circumstances and loss of one income did the trick. I just need to know how favorable it will look for me to lenders knowing the reason of the divorce. Does a discharged bankrupcy look better than forclosure?? Please help, G
Bankruptcy should be the last option to opt for. Now have you talk about your with your lender? If not you should do it as early as possible. Talk to your lender and see what are the options that are available for you. There are so many options like forbearance, mortgage modification, mortgage assumption etc. If these options are not available for you, you can request your lender for deed in lieu of foreclosure or short sale. If these are also not possible only then you can go for the foreclosure. But I will suggest you to avoid you to file bankruptcy as it will have immense harm on your credit report.
Even I think that a bankruptcy is better than foreclosure. When you approach lenders for a mortgage, they will prefer looking at a bankruptcy that does not include your house rather than at a foreclosure.
But on the other hand bankruptcy damages your score the most. So it will be better if you try to build your credit till you get a discharge.
You should consult an attorney before you take any step.
Posted: Wed Nov 07, 2007 5:07 am Post subject: RE: Is discharged bankruptcy better than foreclosure?
Hi Ladyg,
Welcome to our forums.
Whether it's a discharged bankruptcy or a foreclosure - both are equally bad. Moreover, what's going to affect your credit is not that it has been discharged. There is some time gap between filing a bankruptcy and getting a discharge. What affects your credit is that you have filed bankruptcy and have been through it. This is somewhat similar to the effect that foreclosure has on your credit report.
However, if it's not chapter 7 bankruptcy wherein you sell your assets to pay off debt, but it's chapter 13 wherein you repay a part of the debt, the latter makes sense because you are at least trying to repay your debt to some extent. Creditwise it will have less negative effect compared to foreclosure. However, as per the Means Test, you need to qualify to file for chapter 13. You can yourself find out if you'll qualify for filing chapter 7 or 13.
But I do have a question here. Who was on the loan actually - both of you or only your spouse? And prior to filing for chapter 13, try out for short sale - that's a much better option when it comes to choosing either a foreclosure or bankruptcy.
Posted: Wed Nov 07, 2007 8:20 am Post subject: Foreclosure vs. bankruptcy
Hi, I'm in the middle of foreclosing on my home. I've tried the short sale, and talking to the bank. I'm locked in an adjustable rate and I can't pay my mortgage anymore. What is my best solution here, foreclose or file for bankruptcy? I understand both are bad and will hurt my credit scores no matter what but which one will help in the long run if I should decide I want to buy a house again.
I'm sorry to hear about you problems. Larry mentioned something that you should keep in the forefront of your mind- Deed in Lieu. Just make sure you involve an attorney to protect yourself. A Deed in Lieu, is basically you signing the deed of the property over to the mortgage company. It avoids the costs and headaches of foreclosure for the mortgage company and may allow you some options. It will still report bad against your credit, but you may be able to have your attorney negotiate better terms on your behalf.
Posted: Thu Nov 08, 2007 1:08 am Post subject: RE:
N,
Neither foreclosure nor a bankruptcy is the right option. I feel you are on the right track - short sale. You can also try for deed-in-lieu but you may not want to lose your home. So short sale is the best in your situation.
By the way, i found some community members discussing on a similar situation at http://www.mortgagefit.com/foreclosure/file-bankruptcy.html . You can take a look at their suggestions and feel free to discuss any further thoughts on this. _________________ Procrastination is the enemy of your financial sucess
ladyg1220
