In some cases, families or individuals find that bankruptcy is the only option that they have. Though this seems like the easy way out, most wont advise it unless it is the only thing that can save them financially. Before anyone goes about doing this, they had better ask the right bankruptcy questions before they begin.

First question to shoot would be to fly solo or ask assistance from a lawyer. This can vary from each person, most are better off having a lawyer to assist them. Your lawyer can clear up any issues that you might not understand during the process.

Doing more research on bankruptcy lawyers can answer some of these questions. You may even find a great one through the Internet if you look around.

Second bankruptcy question to ask would be what kind of feedback they can expect to have reflected on their credit standing. Some people think that once they’ve filed for this they won’t have to worry about a single thing anymore. However, this is far from the case.

You can get credit after bankruptcy, but it is not always the credit that you want, and it will come with a very high interest rate. Credit consolidation loans and other options should be considered first because they will not be as harmful to your credit situation as bankruptcy will be when it is all said and done.

Other bankruptcy questions might include how long the process might take and if there are any debts that might be excluded. There are times when you may have to go to court for your proceedings, and other times you may be able to skip that step with the help of a lawyer.

You may also find that some debts like student loans are exempt from bankruptcy. That means you will still owe that money once you have gone through the process, and it will still be on your credit report. You can think of bankruptcy as a new start, but one that definitely comes with a price.

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A Chapter 13 bankruptcy can stop foreclosure, and if you have a 2nd mortgage that values more than your home is worth, there may be an opportunity for the bankruptcy judge to wipe away the second mortgage. This is because a Chapter 13 bankruptcy is designed to restructure your unsecured debt and allow you to pay back your creditors at a reduced amount. The judge will bundle all of your credit card and medical debts and give you one monthly payment to keep up with throughout the life of the Ch 13 BK. Because your second mortgage may no longer be ‘secured’ by the value of the property, the judge has the option to absolve the debt, or enter into a reduced payment plan.

The negatives of a Ch 13 BK to stop foreclosure are that the 1st mortgage will not be touched or modified (you will continue payments under the original loan terms), your credit is blemished for 7 years, bankruptcy is a public record, and the hassles and headaches of the bankruptcy process.

You may need to Need to refinance to stop foreclosure. This is only an option if you have not made a late payment on your mortgage in the past 12 months AND if your mortgage amount does not exceed your home value by more than 5%. There are great FHA programs to consider for a refinance if you meet these guidelines.

Themaking home affordable refinance program put in place by the Obama administration has created a great opportunity to refinance, as long as you are not too ‘upside down’ and you are current on your mortgage.

Another option for you to consider is a loan modification. A loan modification is the changing of the terms of the loan to affordable levels. This can be done through the reduction of interest rate, extending the terms of the loan, converting to an interest only, and even reducing the principal loan amount on the mortgage. Whereas a bankruptcy will not change the terms of your mortgage, a loan modification will.

If your mortgage is owned by Fannie Mae or Freddie Mac, you may even qualify for the Obama administration Modification plan. Through this government modification plan, the bank must follow certain guidelines. Here are the rules: Your bank must modify the terms of your mortgage to achieve a ‘target debt to income’ ratio. The target DTI is 37%. This means that your mortgage payment must not exceed more than 37% of your monthly net income. The bank can achieve this target DTI by first lowering your interest rate to as low as 2%, and secondly by extending the terms of your loan to as long as 40 years. If neither of these actions achieves the target DTI, then the bank ‘may’ reduce your principal loan amount.

LoanModUS.com is here to help you determine which fit to stop foreclosure is best for you. Whether it is through mortgage modification, refinance, or bankruptcy, LoanModUS.com is here to help. You can reach us on the LoanModUS.com website, or call 1-888-500-2414 for a FREE financial evaluation and home loan modification help.

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