Other Option: Bankruptcy. However, we recommend you Short Sale your Home.
Save your home:
- Modification mediation program available in bankruptcy, with a 70% success rate rather than the much lower state mediation program.
- Chapter 13 plan: you can use this to catch up on past due payments or to pay a 31% estimated HAMP modification house payment to fulfill the trial period for a mod.
- You can strip off and discharge a second mortgage or home equity loan in both a Chapter 13 and a Chapter 7 now. The Tampa division has recently begun to allow this in Chapter 7 as of the end of May 2012.
- If have been declined a modification due to yam debt ratios, eliminate that debt in a bankruptcy, then reapply for a mod.
- Even if not modifying your home mortgage, file a bankruptcy to discharge unsecured debt such as credit cards to make it easier to afford your house payment.
- Stop HOA (homeowners association) foreclosure by filing a Chapter 13 and catching upon unpaid dues over 3-5 years.
- If the bank has improperly forced place insurance or improperly applied your mortgage payments, the bankruptcy court allows your attorney to object to the b s proof of claim and even sue the bank if they have damaged you. The bankruptcy court recently amended its rules to make it easier to bring these challenges.
Walking away from your home:
- The bankruptcy court allows for short sales through either a notice of abandonment by a Chapter 7 trustee or a court order allowing the sale in a Chapter 13.
- Protect yourself from deficiency lawsuits for unpaid mortgages.
- Protect yourself from IRS debt by discharging the debt in bankruptcy which is not taxable rather than allowing a 1099c to be filed canceling the mortgage debt which is taxable
- Bankruptcy remains on your credit report for 10 years. But it erases the debt so many debtors are able to quickly rebuild their credit in 18 months.
- Even when surrendering your home in bankruptcy, you don’t have to move out immediately.
- Defending your foreclosure can allow you to stay 1-3 years even after a bankruptcy.
Impact to credit:
- Credit survey shows what you can expect. Filing bankruptcy is no worse than a foreclosure and often fixes a lot of problems by eliminating deficiency judgments, second mortgages, credit cards, hospital debt and repos.
- Getting behind in your mortgage even if advised to do so by your mortgage company to qualify for a modification will cause your credit score to decline.
- Short sale is usually better than a foreclosure final judgment for future governmental financing of another home.
- Deed in lieu or short sale gets the property out of your name allowing you to move on faster with another home purchase in later years.