I’m Behind on My Mortgage Payments. Should I File For Bankruptcy or Move Forward With a Foreclosure?
There are many factors involved when deciding whether to face foreclosure, or resort to bankruptcy as an alternative to losing your home. Asking yourself the following questions can help to determine which path may be best for you.
Do you have other debt or payments you may be falling behind on?
With the exception of non-dischargeable debts such as child support, student loans, or alimony (see full list of non-dischargeable debts), filing for bankruptcy can help to eliminate or consolidate all of one’s debt, including their past-due mortgage and late fees.
Do you want to keep your home?
Filing for bankruptcy can aid in foreclosure situations in a couple ways. First, if it’s simply time that you need, filing for bankruptcy (whether completed or not) can help to delay the foreclosure process, giving you enough time to come up with the money to become current on your mortgage & fees and stop the foreclosure altogether. Second, by filing Chapter 13 bankruptcy, your mortgage and all other debt will simply be restructured into a new monthly payment plan, eliminating the threat of impending foreclosure.
Do you have other assets?
In a foreclosure, the only asset the lender can come after is your home. Filing for bankruptcy, however, could put your other assets at risk as well. If not exempt under Nevada bankruptcy exemptions, your car, other properties, or other valuable items could be repossessed to pay back lenders.
Are you married?
Though it may not seem important, this factor may make a difference when considering bankruptcy. Foreclosure may impact both spouses’ credit, whereas through bankruptcy a married couple has the option to leave one spouse unaffected, creating more opportunity for financial recovery. Read more in “Is It Better For A Married Couple To File For Bankruptcy Jointly Or To Have Only One Spouse File?”
Have you considered all other options?
Mortgage lenders generally want to avoid foreclosures whenever possible and are therefore usually very willing to discuss alternatives. Unlike bankruptcy, many alternatives to foreclosure do not involved further credit damage or lasting consequences.
The above are only a few of the important factors to weigh when deciding on the best financial recovery solution for you. The most important thing is to communicate effectively with lenders and creditors and be transparent as soon as a financial setback has occurred. Ignoring collections calls, or letting debt add up will only worsen the situation, and sometimes limit your options.
Contact our office to discuss your specific situation in detail. Our team will help you identify all available options, and guide you through deciding on the best route for you. To schedule a meeting, contact us at (702) 998-1188, firstname.lastname@example.org, or by scheduling a consultation online.