When you are considering filing personal bankruptcy, please do your research to know the ramifications and in what ways you are protected. There are some assumptions about filing bankruptcy that are incorrect. I should have researched filing bankruptcy the year before I determined I was bankrupt, I would still have $60,000 in my 401k.
1) Your credit score will be ruined for 7 years when you file bankruptcy. True, to certain respect. It stays on your credit report for 7 years, but your actual FICO score will depend on what it was before you filed bankruptcy. If you are in the 500's before bankruptcy, you will be likely to be in the 500's after bankruptcy. I have seen plenty of credit reports for clients who filed bankruptcy, and they were in the mid 600's a year after bankruptcy. So it's not a hopeless situation.
Bankruptcy Attorney Albuquerque, Involuntary Bankruptcy, How Does Bankruptcy Work,
2) Lenders consider your mortgage to be in foreclosure f you are 120+ days late, even if the foreclosure process has not been started. You have already ruined your credit and your refinancing options even if you did not file bankruptcy. Even if you catch up on your payments, no lender will refinance your mortgage until you have 2 years of your payments being made on time, the same guidelines as if you filed bankruptcy.
3) A HUGE misconception I had was that I lose your 401k or retirement savings if I filed personal bankruptcy. Your 401k, IRA's, retirement accounts and educational IRA's are protected. The year before I filed bankruptcy, I tried to keep myself OUT of bankruptcy by cashing $60,000 out my 401k, which just delayed the inevitable. This is a $60,000 mistake that you can save yourself from making.
4) You will lose your home when you file personal bankruptcy. False, you only lose your home if you chose to give it back to the bank. The same also applied to your cars. In a Chapter 7 bankruptcy, if you are current on your mortgage payments, you can reaffirm your home. If you are behind 3 months of payments, you will need to get those caught up. You will have to determine if this is an option for you. Depending on your certain circumstance (what you owe, condition, etc...), it may be a better option for you to not reaffirm your house or cars and let them go back to the bank. Under Chapter 13 bankruptcy, you can reaffirm your house and cars, and that will allow you to renegotiate your terms and payment options, which will allow you to become current without having to come up with additional money.
5) You will pay terrible interest rates on loans for a very long time. Partially true, partially false. In regard to mortgages, after your personal bankruptcy has been discharged for 2 or more years, you are able to purchase or refinance a home using an FHA loan*, and FHA offers very favorable interest rates. In terms of credit cards, many credit card issuers will issue a card to people who have just been discharged from bankruptcy at rates of 18%. Considering many long term credit holders and people with good can be paying a 30% interest rate if they made their payment even one day late, and 18% rate doesn't look too bad.
By using this research, you can talk to a bankruptcy attorney feeling very confident. Please note that laws may possibly be different in your state, please contact an attorney licensed in your state. All of the above information is based on my personal experience and knowledge I learned from my bankruptcy filing.
*FHA guidelines change constantly. I would check with a mortgage loan officer to verify the current guidelines.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Seattle Bankruptcy Attorneys
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment