What You Need To Know About Bankruptcy Equity Home Loans

Bankruptcy can often seem to be the sole choice for a lot of people looking to eliminate their debt in a decent time frame

. This is never an easy decision to reach. It is also very difficult to get credit again afterward. However, even though it is difficult, it is not impossible. One type of credit that can be obtained even during a bankruptcy is an equity home loan. There are however, some facts regarding bankruptcy equity home loans that people should be made aware of.

Such bankruptcy equity home loans are sometimes utilized to satisfy a chapter 13 kind of bankruptcy before term. The court system gives a person three to five years to discharge all their debts under chapter 13. Under certain circumstances, the person's attorney can file paperwork requesting the right to incur a new debt in order to pay off the old ones faster and at a lower interest rate.

If this request is granted, the lawyer will then confer with financial institutions to locate a home equity loan that is agreeable to helping the debtor eliminate the debt in the time allowed, and can give a decent amount of cash to eliminate many of the original unsecured debts.

If one already has a home equity loan outstanding when filing bankruptcy, it is important to note that this is a secured form of credit. With it being secured, the only way to get rid of the debt using any form of bankruptcy is to let the lender have your property and leave your home.

This is also the case for any home equity loans received when the debtor is undergoing bankruptcy. The only choices you have to get rid of this debt are to pay it back in full according to the terms agreed on when taking out the loan or to turn your property over to the lender.

The above information can be a benefit to debtors who are in the midst of bankruptcy. Banks are more willing to consider making a loan to someone with sufficient security to cover the amount of the loan and sufficient reason to ensure that it gets paid back on time.

You can also begin to build you credit again once you have finished with your bankruptcy by using a bankruptcy equity home loan. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.

Getting any kind of credit in the midst of bankruptcy is nothing short of challenging, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It can help to pay off creditors much more quickly than would otherwise be possible. It can also help to make the payments easier to afford by giving one more time than the allowed three to five years to pay the loan off in full. Debtors need to keep in mind that no matter what, the bankruptcy equity home loan must be repaid as it is secured by a house that can be foreclosed upon if the the payments are not made.

by: Andy Giera

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