Tips To Avoid Home Foreclosure And Bankruptcy

Bankruptcy is a last resort

Bankruptcy is a last resort. It can require that people sell a lot of their possessions, and can leave a long-lasting negative mark on their credit reports, so people like to avoid it as much as possible. Avoiding bankruptcy is possible with a debt consolidation loan.

The Debt Consolidation Loan

With a debt consolidation loan, people receive a large sum of money that is used to pay all of their debts in full. This is advantageous to people if they receive a loan that has a lower interest rate than the interest rates they are paying for all of their debts. It would also be excellent for people who are avoiding bankruptcy because it will simplify their lives. They wont have to manage several debts every month because they will only have one payment to make.

Refinancing for Debt Consolidation

To obtain a debt consolidation loan, people can refinance their homes. This will provide them with money they can use to pay their high interest debts in full. This option is good for people who have:

- Difficulties paying their monthly bills

- Credit scores at least in the fair range

- An interest rate on their mortgage that is higher than current interest rates

- The possibility of low closing costs

The Debt Settlement Company

The other option for avoiding bankruptcy is to seek the help of a debt settlement company. With debt settlement, clients will have one payment to make every month like with consolidation, but the company will first negotiate with their creditors so that they owe less money on their debts.

Sometimes, debt settlement companies can obtain an agreement that reduces the balances by up to 45 percent. They also make it a point of reducing the interest rates on these debts. This keeps the debts from increasing at as fast a pace as when their rates were higher. After these agreements have been made, the consumers pay the debt settlement companies the agreed upon amount each month, and the companies pay all of the creditors.

The Short Sale

Not everyone is in danger of bankruptcy, but they may need to avoid home foreclosure. In these cases, they may not qualify for a refinancing. They can avoid home foreclosure by asking their lenders to agree to a short sale. With a short sale, the house will be sold for less than is owed to the lender, this is why the lender has to agree. The remainder of the amount owed will either be forgiven by the lender, or the borrower will be responsible for paying it.

by: William Hauselberg

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