If you are facing foreclosure or you have been laid off or for some reason you are unable to make your payments on your home, then more than likely you have had to look at possibly filing a bankruptcy. After all, when you listen to the radio or the TV, all the bankruptcy attorneys tell you how bankruptcy can solve your financial woes. However, is that true? When faced with two choices, which one is better for you and your family? Bankruptcy or Foreclosure?
The truth of the matter is that there is no one right answer. The true answer depends on your specific circumstances as to which one you should do. Therefore, I made a list of some of the things you should ask yourself before you choose one of these options. This is probably the most unbiased answer you will get, as I am not trying to sell you something.
- 1. Can you afford your home?
If you were to get the payments that you are behind on; placed into a bankruptcy, could you then afford to pay your regular payments starting now? If the answer is no then maybe you should consider the foreclosure or giving the house back to the bank. Stop stressing over this house and go find some place you can afford.
- 2. Do you have other debts that are holding you back?
Is your house the only real debt you have? If you owe on many credit cards and other things and you are not able to pay, then the bankruptcy might make sense for you because it will knock off the rest of the debt and maybe that will help you pay your mortgage. If you don’t have a lot of additional debt or all your additional debt is in good standings, then the foreclosure may be better because it will only be one blemish on your credit.
- 3. Do you have income?
This is a basic question but if you are the result of a job layoff or you are currently unemployed then a bankruptcy may not help you very much. In order to keep a house with a bankruptcy, you must still be able to make payments so if you have no income then you might want to do a bankruptcy that wipes everything clean AND gives back the house to the bank. Otherwise, you might be in this same situation again in a year or so.
- 4. If nothing were wrong with your finances, would you still want the house?
People that save their house thru bankruptcy sometimes realize after going thru the entire process that they don’t really even want the house. It may need too much work or it may be that they want a better area or school system. Therefore, they end up trying to sell the house or defaulting on the bankruptcy because they did not think the entire process thru clearly.
So when making a choice between the two be sure to weigh your options. One last thing. The most important thing to remember is that if you file bankruptcy or have a foreclosure, you must establish new credit after the foreclosure or bankruptcy in order to use your credit. You get no credit with credit reporting companies for not using your credit. You still need to establish and maintain new credit to show that you are financially responsible. Hope this helps…Until next week.