Gilbert bankruptcy Attorneys explain the link between real estate & bankruptcy
There are a lot of reasons why you might not be able to afford your home anymore but aren’t able to just sell it and move on. The real estate market in your area could have dropped significantly, which means that you now owe much more on your home than it is worth. Or you could have run into financial troubles, such as an injury, illness, or job loss, and now you’re struggling to pay the mortgage and have fallen behind on the payments.
You may be worried about the house going into foreclosure, or you may be thinking about options like a short sale or a bankruptcy. But, beyond your immediate concerns about managing the mortgage, you may be more worried about how any of these options is going to impact your credit. You’ll need to talk to a financial advisor or a Gilbert bankruptcy attorney to know how these options will impact you specifically, but here are some things to consider:
HOUSE Short Sale
In a short sale, you are selling the house for less than what you owe. You must get permission from the bank for a short sale, which it may grant if it thinks you are unlikely to be able to keep paying on the mortgage. If the bank agrees, it may also agree to forgive the amount that you still owe on the mortgage after the sale, or it may require you to pay the difference. But whether the amount is forgiven or you pay the difference, the impact on your credit is the same.
Typically, you can expect your credit score to take about three years to recover after a short sale. That’s not a very long time, so the impact on your credit report shouldn’t be a big factor. Your decision is more likely to be influenced by whether the bank will forgive the deficiency (the difference between the sale and the amount you owe).
LET THE BANK INITIATE Foreclosure ON YOUR HOME
If you can’t pay your mortgage and you know you don’t want to keep the house, you don’t actually have to do anything. You can just stop paying and let the bank initiate foreclosure proceedings on your home. The impact on your credit will be the same. It will take about three years for your credit score to recover after a foreclosure.
You may want to allow the bank to initiate foreclosure proceedings rather than going through a short sale to save yourself some of the hassle of selling the home, as well as to give you some more time in the home. It can take awhile for the foreclosure process to go from start to finish, and that can give you some time to get together your finances and figure out your next moves.
file for Bankruptcy to get other debts discharged
It can take about five years for your credit score to recover after you file for bankruptcy, though you can qualify for credit long before then. If you know that you do not want to keep your home and that you cannot sell it for a profit, you may want to consider a combination of letting the home go into foreclosure while also filing bankruptcy. When you do this, you are relinquishing the home while also getting your debt discharged. Filing for bankruptcy in Gilbert can also discharge other debts, such as credit cards, car payments, and medical bills, or it can restructure them into a payment plan that you can actually afford.
While filing for bankruptcy can make a blow to your credit, continuing to struggle with debts that you cannot afford can be equally harmful to your credit. Rather than having month after month of unpaid or late accounts putting mark after mark on your credit, you can file for bankruptcy, discharge all that debt, and take one hit that you can begin recovering from
Contact the most qualified bankruptcy lawyers in gilbert
Filing for bankruptcy can give you the debt relief you need to finally get a handle on your finances and start creating some of the financial freedom you crave. Call Gilbert Bankruptcy Lawyers today to learn more about Chapter 7 bankruptcy and Chapter 13 bankruptcy and how they might be able to help you with your debts. Our attorneys are committed to helping you get the maximum debt relief possible under the law. Call us today to schedule a consultation and learn more about the right strategy to meet your goals.