Bankruptcy or Foreclosure - Which is Best?

Posted by Daniel Peterson on October 12th, 2008 at 12:08pm

Did you know that having a Deed in Lieu on your credit report is just about as harmful as having a full-blown foreclosure? Signing a Deed in Lieu could be a very poor decision. Far from waiting for banks to take the initiative, those who still have some equity in their property and somewhat decent credit score can implement the strategies outlined in the Financial Safety System. The strategy ultimately saves homeowners hundreds of thousands of dollars in mortgage interest, improves cash flow and allows them to own their property free and clear sooner. You may be told that surrendering the title will permit a borrower with a better credit rating to secure new financing ? But the terms of these deals usually are so burdensome that buying back your home becomes impossible.

Bill collectors can sense when a debtor is sinking fast, and they also sense that they are competing against each other to squeeze out whatever limited money a debtor has left before some other creditor can take it. The strong arm tactics exerted by many bill collectors often become downright vicious at this stage of the collection process. What is similar to the LTCM bets and some of the bets on Mortgages and then later on credit derivatives is that they were all highly leveraged. It ’s good to have someone working with you to improve your situation and increase the bad credit scores you’ve suffered.

This is when your credit score will really get hurt. While paying the minimum may not get you out of debt fast, it is essential if you want to keep your credit score in good standing. If the foreclosure starts prior to the BK then it will always remain on your credit report that way and it will be very difficult to get financing in the future. BK does not affect your ability to get financing as much as a foreclosure. We have several purchasing options that can help you save your credit.

What happens is that now you just have one lender to pay to instead of many, this is called debt consolidation. Hence you pay back a lesser amount at a long period of time. This will put an end to the civil actions being filed against the debtor during the time they are in bankruptcy. This means that the mortgage lender cannot continue through with their legal actions, including a foreclosure. But there are other areas of your credit file that can boost your score, such as keeping open one or two existing loan agreements to show you are making efforts to repay your debts.

Because of the fact that in a situation of bankruptcy, a mortgage lender will have to suspend a foreclosure action, the debtor has some time to raise the money and pay off. Bankruptcy can allow a person to not have to make certain payments and, therefore, he might have enough extra money to make payments on his mortgage. This action stops all civil proceedings against the debtor while the debtor is in bankruptcy. As a result, the mortgage lender is incapable of immediately continuing their foreclosure, or any other legal action. A foreclosure can be halted through these means because lender is required to cease all their legal actions against the debtor.

Tags: Arm Tactics, Bets, Bill Collectors, Bk, Cash Flow, Credit Derivatives, Credit Rating, Credit Score, Credit Scores, Creditor, Debtor, Deed In Lieu, Financial Safety, Foreclosure, Hundreds Of Thousands, Mortgage Interest, Poor Decision, Safety System, Strong Arm, Thousands Of Dollars

Under Main Content