subject: Navigating Through The Foreclosure Problem [print this page] There are several issues that need to be addressed for the foreclosure problem. Many homeowners are under the impression that if they file for bankruptcy, then they can delay the process by quite some time. However this isnt the case. In fact, this is only a temporary delay and the homeowner can be forced to make their overdue mortgage payments. The homeowner should either get their mortgage loan refinanced or modified or sell off the home during a short sale. In conditions that these processes dont happen then bank can start the foreclosure proceedings and can ensure that they sell the house in the foreclosure auctions.
For those that have a current income, they can file for bankruptcy under Chapter 13. After the homeowner has filed for bankruptcy under Chapter 13, they are given time to repay their debts in a systematic manner over a period of 3 5 years. A trustee is appointed who ensures that the homeowner pays back the installments of the debts. Debts that havent been secured by collateral are usually waived off. This means that the homeowner can effectively lower the burden of their debt. Some of the unsecured loans includestudents loans. While those homeowners that file under Chapter 11 are forced to sell off their assets in order to pay off their loans. Further they will lose all their equity in the house and their house can also be sold off. Filing under Chapter 11 bankruptcy is usually done by those that dont have any source of income or are incapable of paying back the overdue and existing debts that they have.
Before taking the step of filing for bankruptcy, the homeowner should consult a bankruptcy attorney and access other options that are available. There have been many homeowners that have fallen prey to a number of scams, whereby the homeowner has lost their savings and the home.
Foreclosure and bankruptcy can have ill effects on the credit report of the homeowner. For those that are foreclosure, it can affect the credit scores badly. A foreclosure stays on the credit report for a period of 7 years. During this time, the homeowner can find it difficult to get mortgage or home loans. This means that it would be difficult for them to own a house. If they do get loans, they are charged sub prime rates or interest rates that are higher than the prevailing interest rates.
In case of bankruptcy, it stays on the credit report for a period of 3 5 years. The payment of the overdue loans is reflected on the credit report. This helps in increasing the credit score of the homeowner. During the first 3 years after the bankruptcy, it can be extremely tough for the homeowner to get loans.
The homeowners can also ask for new loans after they have paid back all their old loans. The process can be lengthy and it could be some time before they are able to get another mortgage loan for the home.
