If you are behind on your mortgage payments, you might feel as though you have no choice but to allow the lender to foreclose on your property or declare bankruptcy. Which choice is therefore worse?
It’s actually very challenging to respond to this topic in a definitive manner because it depends on the specifics of your individual case whether you decide to file for bankruptcy, foreclosure, or both. We can, however, offer some general guidance to assist you begin to consider this choice. Read on for answers and then contact Law Offices of Terrence Fantauzzi at (909) 552-1238 for a consultation with the best bankruptcy lawyer in Fontana CA.
What is the value of your home?
It could be preferable to just let the bad investment go if you don’t have much equity in your property and are actually underwater on your mortgage. You’ll be able to relocate to a place you can afford as a result. This choice should ideally be made in advance of the need to foreclose on the property.
You can vacate the property without significantly harming your credit if you can persuade the lender to approve a short sale. However, you will forfeit your home’s equity. This is a tough situation but the best bankruptcy lawyer in Fontana CA can help you determine the best way forward.
How far behind on your payments are you?
It can be in your best interests to file for bankruptcy with the goal of maintaining your home if you are not underwater on your mortgage. You should only do this, though, if you are certain that your financial hardship is just temporary and that you will soon be able to resume making your mortgage payments on time.
Any bankruptcy filing will halt foreclosure actions temporarily, allowing you much-needed time to make up missed payments
The best bankruptcy option is Chapter 7 for people who are only marginally behind on their payments. Before the lender can proceed with the foreclosure procedure under Chapter 7, they will be required to file a specific motion. You may have just enough time to make up missed payments thanks to this. However, keep in mind that Chapter 7 has a means test, so not everyone will be eligible.
With Chapter 13 bankruptcy, which is more accessible, you’ll have more time to make up missed mortgage payments. You must follow the Chapter 13 debt repayment plan established by the bankruptcy court if you want to keep your house. This calls for continuing to pay your mortgage every month while also making a partial payment on your bills and arrears.
Which is more detrimental to your credit score?
A foreclosure will immediately lower your credit score by at least 200 points, according to FICO analysts. A bankruptcy will reduce your credit score even further because it affects more than just your mortgage. Your low credit score might not hurt you as much, though, if the bankruptcy permits you to maintain your house because you won’t need to apply for a new mortgage or rent agreement to have somewhere to live.
Get help from the best bankruptcy lawyer in Fontana CA
We at Law Offices of Terrence Fantauzzi have a lot of expertise defending against foreclosure. If you decide to file for bankruptcy, we would be pleased to walk you through the process and explain your alternatives to you. Contact us now at (909) 552-1238 to speak to the best bankruptcy lawyer in Fontana CA.