For homeowners facing the daunting reality of falling behind on mortgage payments, finding a way to regain control of their financial situation can seem like an insurmountable challenge. In such distressing circumstances, exploring alternative solutions becomes crucial. While bankruptcy may carry a certain stigma, it is important to recognize its potential as a legitimate debt resolution option. In this article, we delve into the world of bankruptcy as a potential lifeline for homeowners struggling with mortgage arrears. By shedding light on its intricacies, benefits, and potential drawbacks, we aim to equip you with a comprehensive understanding of this debt management strategy. Whether you are already contemplating bankruptcy or simply seeking insights into potential solutions, this article will serve as a valuable resource, providing you with the knowledge necessary to make informed decisions and navigate your way towards financial stability.
Consider The Following Possible Solutions Before Opting For Bankruptcy
Bankruptcy has major long-term consequenses and should be avoided if at all possible. There are multiple options you should consider as alternatives on the road to bankruptcy. Here are several options.
Consider Debt Consolidation
One such option is debt consolidation. You do this by combining all your loans into a single payment each month that has better terms and lower interest rates. This may make debt repayment more manageable and perhaps result in long-term cost savings for you.
Consider Credit Counseling and Budgeting Services
Another option for those looking for relief from their debts is credit counseling or budgeting services. These organizations collaborate with creditors to develop repayment programs that benefit both sides and keep consumer payments manageable. Credit counselors can also offer guidance and aid in budget creation for those trying to get out of debt.
Consider Selling Assets
You could have assets that, if sold, might help you pay off some or all of your debt if you have been affected by the recession or are in danger of going into foreclosure due to a combination of debt and job loss. Your home may be your most valuable possession. Before doing this, there are several important issues to think about. You may already be in foreclosure if your house payment is a contributing factor in your financial difficulties. More information on what we have to say regarding foreclosure is available here. You might be able to sell your paid-off home and utilize the money generated to settle your debt and avert further unfavorable actions and repercussions. As long as you have somewhere to live while getting back on your feet financially, selling your home could also be advantageous if you have a lot of equity in it, which means you either paid down your mortgage significantly or the value of your property has increased significantly since you first purchased it.
As A Last Option – Considering Bankruptcy
A last resort when dealing with massive debt is bankruptcy. There are two basic types of bankruptcy filings. One is chapter 7 and the other is chapter 13. On the surface, they seem similar:
Both are subject to federal regulations.
Both mandate financial education for debtors.
Both offer the chance to pay off debt.
However, there are major differences. The quickest and easiest type of personal bankruptcy is Chapter 7. Chapter 7 bankruptcy is, unsurprisingly, the most common kind of bankruptcy.
Chapter 7 Bankruptcy Filing
If you file for Chapter 7 in Arkansas, your case should be finished in four to six months if you follow the court’s instructions and abide by federal bankruptcy laws. You seek a “discharge” when you file for bankruptcy under Chapter 7, which denotes that the bankruptcy court has released you from liability for “dischargeable debts” In other words, a bankruptcy discharge releases you from the need to pay off dischargeable debts.
Which obligations are genuinely forgiven? The majority of debts, including corporate debt, credit card debt, personal loans, and medical debt, can, fortunately, be discharged under Chapter 7 of the bankruptcy code. Some debts are nondischargeable under federal law, which prevents bankruptcy from wiping them out. Chapter 7 non-dischargeable obligations include, among other things, alimony, child support, tax debts, and, frequently, student loan debt.
In a Chapter 7 “liquidation,” a court-appointed bankruptcy trustee may sell specific items to pay your creditors. However, don’t be concerned; most people who file for Chapter 7 bankruptcy are able to keep the majority, if not all, of their goods, either because they were covered by bankruptcy exemptions or because the trustee determined that it would be impracticable to sell them.
Chapter 13 Bankruptcy Filing
Chapter 13 bankruptcy is a type of consumer bankruptcy that enables debtors to design and adhere to a budget-friendly repayment plan for some or all their debt. It allows people the chance to keep valuable possessions like their homes, cars, and other property. To qualify for this sort of bankruptcy, applicants must demonstrate that they are employed regularly and will be able to pay back some of their debt, as set by the court. All debts covered by the plan must be paid in full within three to five years, while some plans provide for a seven-year repayment period if necessary. Filers will be shielded from creditors and attempts at collection during the repayment plan in exchange for following these payback criteria. Giving people and families a second opportunity at financial security while enabling them to keep valuable assets is the aim of Chapter 13 bankruptcy. In the end, it can be a potent instrument for escaping uncontrollable debt.
Not everyone should file for Chapter 13 bankruptcy or Chapter 7 bankruptcy; any choice to do so should be carefully considered and discussed with an experienced financial advisor or bankruptcy lawyer. Debtors must comprehend the procedure, any hazards, and the many kinds of debt that can be discharged before filing. In the end, declaring bankruptcy is a significant financial choice, therefore debtors should be well informed before committing.
Remember, Bankruptcy Should Be A Last Resort
Filing for personal bankruptcy can have long-lasting negative impacts on an individual’s financial health, credit score, and ability to obtain future forms of financing.
The fact that a bankruptcy filing can remain on a person’s credit report for up to 10 years is one of the biggest effects. This will severely restrict their options for obtaining credit cards and other types of finance, as well as their capacity to receive funding from lenders. Additionally, the filing might continue to be accessible to prospective employers or property managers, which could harm their chances of finding work or a rental home.
Additionally, declaring bankruptcy may result in higher interest rates later if the person manages to get a loan from a lender. Creditors are less likely to take on the risk associated with financing to someone who has already experienced bankruptcy because they see it as a sign of financial instability.
Perhaps Little Rock Property Buyers Can Help Reduce Debt And Avoid Bankruptcy or Foreclosure
Perhaps a quick cash deal will help you reduce debt and achieve financial stability if you are in financial problems but find that you are in a good position with your house in terms of having a lot of equity or owning it outright. Although there are many myths regarding professional home buyers, the majority are good companies with helpful employees. If you need to sell your home but it is old, out-of-date, needs expensive repairs, or has other unaffordable needs like decluttering or cleaning, Little Rock Property Buyers can be a perfect option. Remember, Little Rock Property Buyers can pay cash for an as-is property. No repairs needed. No commissions, no closing costs, or fees. You can read more about how we work at Little Rock Property Buyers here. You can check out our Google reviews here. Not only is this the quickest option, but you will also save money and time and perhaps this cash can help you get back on your feet and avoid bankruptcy. You can call us today for a no-risk, no-pressure cash offer. If it works for you and makes sense, we can move forward quickly. Call us today at 501-580-3035.