Foreclosure vs. Bankruptcy

yanggryl03 · Joined: 07 Nov 2007 Posts: 1 1.48 Dollars($)

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.

jameswells · Posted: Wed Nov 07, 2007 12:21 pm Post subject: Dear yanggryl03

That's a real tough question to answer without all of your information. Do you have a bunch of other debt? Would you re-affirm on any of the loans you have if you filed BK?
You credit history stays with you for 10 years (not 7 like a lot of people think- you can't file the same chapter of BK for 7 years). It all depends on the lenders guidelines, but I would say that if you can avoid BK then do so. Either way, it will likely be 2-3 years before banks will consider loaning you money, and thats if you have good credit since the BK or foreclosure. The key factor you want to consider is this- you need to begin establishing good credit after the foreclosure or BK, do you need to file BK, so you can afford to pay your obligations on time? If not, and it's really only the house that is hurting you financially, then try and avoid BK.

jenkin7 · Joined: 04 Jun 2007 Posts: 894 133.63 Dollars($)

Hello Yanggry,

Is the date of foreclosure sale already declared?

Have you considered the other ways to avoid foreclosure? You can talk to your lender about forbearance or mortgage modification and lastly about a deed in lieu.
You may look here at http://www.mortgagefit.com/loss-mitigation.html to know more about the loss mitigation process in order to avoid foreclosure.

Why are you thinking of filing bankruptcy? Do you have plenty of other debts, as James has already pointed out?

Caron · Posted: Thu Nov 08, 2007 2:08 am Post subject: RE: foreclosure or bankruptcy?

Jenkin, I think the date of foreclosure is probably declared as he is in the middle of the process.

James, I agree with here when you say that bankruptcy can be an option when there are other debts along with the mortgage. But say, if he wants to keep the home, isn't Chapter 13 a good option then as it would help him pay off a part of his debts or the mortgage if that's the only thing bothering him?

However, if he's not interested to keep the home as he would be buying again in the long run, then he'd be better off doing a foreclosure I suppose.

Good luck

scherzeroni · Joined: 05 Jan 2008 Posts: 51 18.77 Dollars($)

Bankruptcy can give you a fresh start but if you file a chapter 7, you will still need to make arrangements with the mortgage lender directly to bring to payments current if you want to keep the home. That is really what is important here, do you want to keep your home? If so then I suggest calling the lender to find out what options you have. Most lenders offer work out solutions that can help you get back on track with your payments.

Guest 0.10 Dollars($)

im so depress, i dont know if i should file bankruptcy or foreclose my house. its just the mortgage that i cant handle. i have a really good credit score and didnt know that buying a house could be so stressful. well, this is the first month not paying my mortgage. i really what to know whats worst when it comes to bk or foreclose.

Jessica · Posted: Tue Mar 25, 2008 4:37 am Post subject: RE: bk or foreclosure

Well Bee, don't worry too much. Things will be fine, just let some time pass away. Now you do have a good score right? so is there any chance that you can refinance into a new loan and simply pay off the existing loan? have you tried this out? Besides, there are other options to help you avoid a foreclosure.

You can request the lender for a repayment plan if possible or you may consider options like short sale or deed-in-lieu. If neither of the options I've stated works out for you, then think about bankruptcy Chapter 13.

I personally feel it's a better option compared to foreclosure. Check out why it is so from the article on Which is right for you - bankruptcy or foreclosure? .

Regards,

Jessica.

0.10 Dollars($)

not to jump in here, but what if you dont want the house anymore? if you would be willing to give up the house (foreclose) and keep everything else you are still paying on? (credit cards, auto loan, etc.) how would a forclosure effect those things?

sara

Ok, so I guess you've made arrangements for staying somewhere else. If you wish to leave the home at all, why would you foreclose and ruin your credit. Better negotiate with the lender for a deed-in-lieu wherein you can hand over the keys to the former. And, you won't have to pay the deficiency too. Know How deed-in-lieu works before you go for it.

Take Care

Guest 0.10 Dollars($)

Hi all, my situation is similar in that I have excellent credit to this point and haven't missed a payment on anything, yet lenders are not willing to talk to you until you are behind. Furthermore, I am going through a seperation and can't afford the home by myself. I am willing to continue to pay all my other consumer debts, I just need out of the house and don't know if foreclosure or BK would be the best thing to do. Either way, my credit will take a tremendous hit...but the situation is unbearable and I feel like I am throwing away good money if I must walk away from this thing in 3 months anyway. I have a first and 2nd. I told my second I would even be willing to convert that to a personal loan, if they would take the lien off and I could sell the house. I would even give them the surplus from the sale, minus costs...but they won't do it. I thought that would be the responsible thing to do and continue to pay my debts, but no one cares. BK or Foreclosure and everybody loses and gets screwed.

Samantha · Posted: Thu Apr 03, 2008 12:11 am Post subject: RE: bk and foreclosure issues

Hi guest,

Welcome to forums.

I know it's terrible when you are in trouble with your debts and besides you're also on a separation. I hope things get better for you with time.

As for your second lender, what are they asking you to do? do they need the entire second loan to be repaid. Will you be able to sell the property and recover both the debts? If it's possible then go for the sale of your home. I know you won't be able to keep it but at times you don't have a way out.

Alternatively, how omfortable are you filing bk? not that your credit will get too bad if you file ch 13. I think you should talk to a bankruptcy attorney and verify your chances of filing ch 13 because you can't do so if you don't qualify. But prior to meeting the attorney, do checkout why bankruptcy is often a better option than foreclosure .

Hope this helps...

God bless you.

Samantha

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