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Get Out of Bankruptcy using Your Home Equity

June 13, 2020   Loan Tips

Filing for bankruptcy will not always discharge your from all your debts. Now that the New Bankruptcy Law has taken effect, filing for bankruptcy is ever more difficult and complicated. Today, your bankruptcy attorney cannot advice you about which type of bankruptcy you should file. Even if you want to acquire a Chapter 7 bankruptcy and be released from all your debts, it will not be so easy.

Under the new bankruptcy law, the bankruptcy court judge will be the one to decide whether you can file for a Chapter 7 Bankruptcy and get discharged from your debts. First you have to go through a “means test” which calculates your income, your monthly expenses and your financial capability as a borrower. If you passed the test, that’s the only time you can file for a Chapter 7 Bankruptcy. If you fail, the judge will require you to file for a Chapter 13 bankruptcy.

Getting Out Through Home Equity
A Chapter 13 bankruptcy will put you in a repayment plan, which means you still have to pay off your debts. However, through bankruptcy, your debts will be reduced and your creditors will be giving you a much lower interest. Under the bankruptcy provision, creditors can only impose up to 10% of interest rate to their debtors. Furthermore, the New Bankruptcy Law has made all repayment plans to be a mandatory five-year term. This gives you a better chance at getting out of your debts more easily.

If you filed for a Chapter 13 Bankruptcy, there is a way to make things even better for you. By using your home equity to repay your outstanding debts, you have the option to pay off your debts either in part or full payment. Acquiring for a home equity loan will also give you more time to pay off your debts. Inquire from your attorney about this option so that he can personally make the necessary preparations if you do decide to get a home equity loan. It is also interesting to note that a mortgage loan is a great way to rebuild your credit.

No Need to File for Bankruptcy
It is also worth asking if there really is a need for you to file for bankruptcy. Given the fact that the New Bankruptcy Reform Act has made the procedures more strict and more complicated, you might want to consider other options rather than filing for bankruptcy.

Since the Bankruptcy Law will require you to undergo credit counseling with an accredited agency six months before filing, the credit counseling agency can help you find a more appropriate solution to your debt problem. Here is where a home equity loan again comes as an option.

A home equity loan lets you borrow the money you need based upon the value of your home property. By paying your creditors with your home equity, you don’t even have to file for bankruptcy. Again, it will give you more time to make repayments and it will save your credit report from the record of bankruptcy.

However, before you do apply for a home equity loan, find a lending company who will be willing to give you better rates. Keep in mind that a home equity loan uses your home as a security so be aware about your payment obligations.

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Seven Steps on How to File for Bankruptcy (Page 1 of 2)

March 6, 2020   Home Mortgage

In the 21st century, many men and women find themselves struggling to keep their heads above water financially. With ever mounting debt, these people oftentimes need to seek relief by filing for bankruptcy. Perhaps you are such a person who is fighting to make ends meet. As a result, you may be wondering how to file for bankruptcy.

The first step in learning how to file for bankruptcy is to make a comprehensive list of all of your creditors and outstanding debts. When you are working to determine how to file for bankruptcy, you need to appreciate that if you to proceed with a bankruptcy case, you must be sure that all of your debts are disclosed and listed in a bankruptcy petition.

The next step in filing for bankruptcy is to determine exactly what assets you have available to you. Your assets include your recurring income from your job, your home and major items of personal property that you might own (including such items as motor vehicles).

The third step you need to undertake when it comes to seeking bankruptcy relief is to contact all three major credit bureaus. When all is said and done, the three major credit bureaus may have the best record of all of your outstanding debt. By obtaining your credit reports from the three major credit bureaus, you will be able to cross reference your list of debt to make certain that you have all accounts covered and listed.

The forth factor that needs to be considered on the road to filing for bankruptcy, is to determine whether you will seek professional assistance in the pursuit of a bankruptcy case. Some people do elect to file for bankruptcy on their own without the aid and assistance of a lawyer. However, in most instances, it probably is in your best interest to seek the professional assistance of a lawyer in order to properly pursue a bankruptcy case. Therefore, unless you have a very simple bankruptcy on the horizon and unless you actually have some definite, practical legal experience, you should seek out the assistance of a lawyer to aid you in pursuing your case.

In working towards fully understanding how to file for bankruptcy, if you do make the decision to hire a lawyer, you will need to begin an organized search to find the best attorney to meet your needs. Keep in mind that in this day and age there are lawyers that specialize specifically in the area of consumer bankruptcies. As a result, you most likely will want to narrow your search to those specific attorneys who do have experience in dealing with bankruptcy cases. In the long run, you will be best served by engaging the services of a lawyer who has dedicated his or her career to bankruptcy law.

Once you narrow down the list of attorneys you are considering, the next phase in considering bankruptcy is to obtain references in regard to each of these attorneys’ prior performance. References will provide you with specific information on how a particular lawyer handles his or her business and on how successful he or she has been in the pursuit of prior bankruptcy cases. Your local bar association can provide you with the names of lawyers that specialize in the practice of bankruptcy law.

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