A LOT of homeowners who are behind on their mortgage payments are asking me: Is it better to lose your house to foreclosure or file bankruptcy and try to save it? What are the effects of both on my credit? Will I be able to buy another home again with a foreclosure or bankruptcy on my credit record? These are important questions to ask yourself if you are in this situation. But I think that an even more important question to ask is: What is the most realistic option I have under the circumstances and do I have any contingency or back-up plans if things don’t work out as I expected?
The first thing you need to do is to take a good, hard look at your situation and ask yourself if you can really afford to keep your home. Some people are simply unrealistic about their situation and so they end up making the wrong decision. For example, a couple came to me and told me that their home was in foreclosure but that they were “determined” to keep it no matter what happens. But look at the facts: They are 5 months behind on their mortgage payments and property taxes. They need about $25,000 just to get current. Their mortgage payments alone every month are $4200. Their total net income is about $6000 monthly. They have 2 car payments and have credit card debts of about $60,000. Their house has no equity. When I asked them how they were able to make their mortgage payments in the past when they also had all these other huge expenses and debts to pay, they said that the only way they were doing it was by using their credit cards!!! And now that the credit cards are maxed out, they are totally bankrupt. OK, now you don’t have to be an attorney to know just by looking at the facts that this couple could not afford to keep this house from the day they bought it if they had to borrow from credit cards just to be able to make the payments! So if they couldn’t even afford it from day one, why would they be able to afford it now that they’re in a much worse shape with all their accumulated debts?
Now, don’t get me wrong. Of course, every situation is different. There are cases where saving the home is not only possible but is advisable. Factors to consider are income, availability of options (bankruptcy and non-bankruptcy alternatives), equity in the property and how everything fits in your total financial picture and future goals. Is your home an asset you or simply a huge liability that you are better off without? How can you wipe the slate clean and start over? Is filing bankruptcy necessary or can it be avoided? Are non-bankruptcy options such as a loan modification, forbearance, repayment plan or a short sale possible?
If you don’t know the answers, you may feel very frustrated at the moment. But frustration can be a good thing if it propels you to take the needed action to do something about your situation. As a first step, I suggest you consult with an attorney who can advise you regarding your rights and help you implement a plan that makes sense for your situation. Remember that in foreclosure, time is of the essence and every day you waste without taking action only makes your situation worse.
For a free consultation, call Toll-Free 1-866-477-7772. Let us evaluate your situation and recommend possible options. We have offices in Glendale, Cerritos, West Covina and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
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