Thursday, July 27, 2017
Is Bankruptcy An Option, Or Should You Modify Your Mortgage?
Filing for bankruptcy offers a consumer debtor several financial protections. First, a bankruptcy filing stops creditors from calling or suing you. The minute you file a bankruptcy case the automatic stay is put in place, and it is this legal mechanism that prevents creditors from taking action against you to collect a debt. Second, you get a chance to catch your breath and start over. Bankruptcy will either eliminate or reduce your debts, giving you a fresh financial start. In some cases you can even pay less than the full balance for some of the things you keep, like your car, but it depends on the specifics of your case. With all of these possible benefits, it can be difficult to know if bankruptcy is the right option for you.
For instance, if your main debt is your house you may be better off modifying your mortgage instead of filing for bankruptcy. A mortgage modification lets your mortgage lender rewrite the loan, most notably by reducing the interest rate. When your rate goes down, so does your payment. So how can you tell if you should file bankruptcy, or modify your mortgage? Here are some questions to ask yourself:
• Is the majority of your debt credit card debt, or is it your mortgage loan?
• How far behind are you on your house payment?
• Are you able to make your house payment and still pay other bills too, or do you have to decide each month which loans to pay?
• Is your house payment eating up most of your take home pay each month?
• What interest rate are you currently paying for your home?
If you have a lot of debt, besides just your house, bankruptcy may be the better option. But if the bulk of your debt load is your mortgage, you should consider asking for a mortgage modification. You should also think about a modification if your current interest rate is significantly higher than the current rates being offered for home loans. No one wants to pay more for their property than they need to, and if you can obtain a lower rate and pay less over the long haul, a mortgage modification is a good idea.
For more information about mortgage loan modifications, call us today or reach us online at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations for more convenient one on one office visits.