We are considering going into foreclosure as a last end resort, however we don't want to kill our credit scores forever, so I wonder can anyone tell me,Is going into foreclosure as bad as bankruptcy?
2007-07-03 11:00:09 · 9 answers · asked by aaboothe 1 in Business & Finance ➔ Renting & Real Estate
There are a few things that you should understand about a foreclosure and a bankruptcy. Both are a bad idea.
If you are not in foreclosure now, you should make every effort to contact your lender and see if you can work out something with them.
They are as eager to work something out as you are in keeping your home. If the people you talk to on the phone are not your lender, but all they do is service your loan for the lender, ask for the number to your lender.
You are trying to contact the "Loss Mitigation Specialist/Manager" for you lender. Explain to them any problems you are currently having, especially if you have a adjustable mortgage that jumped a great deal.
The loss mitigation manager should be able to give you the options you might have to save your home from foreclosure.
A. Deed in lieu of foreclosure
B. Short Sale
C. Selling your property yourself( Good idea since you are not currently in foreclosure)(Refinancing your loan)
After seven years you are not required to state on the current mortgage loan application if you have had a foreclosure or a bankruptcy. The question on the current mortgage loan application is have you had a foreclosure or bankruptcy in the last 7 years?
Another thing, when you go do credit counseling it also appears on your credit report and in some instances mortgage lenders consider that as paramount to bankruptcy as you are mitigating your debt down and paying off a percentage of your debts.
So if you are considering credit counseling perhaps bankruptcy is a choice since you are gonna be penalized about the same when getting a new mortgage loan.
Check with a credit councelor find out the cost of services and how it affects your credit report. Then do the same with a bankruptcy lawyer. Then you can compare. Most of the two will give free up front information.
I hope this has been of some use to you,good luck.
"FIGHT ON"
2007-07-03 12:45:05 · answer #1 · answered by loanmasterone 7 · 0⤊ 0⤋
Actually, forclosure is much worse than bankruptcy. A bankruptcy can last up to seven years depending on the type, but many credit companies can overlook it if all else is good since then. You can even buy a house with a bankruptcy in your past.
Forclosure, on the other hand, is permanent. If you ever fill out a mortgage app they will ask if you EVER has a forclosure. If so, they will not give you a mortgage. You can clean up credit, but not a forclosure.
If you are having problems making your payments on your house you can do one of two things. If you have equity, you can sell and try to pay off the loans you have and take any equity you can. If you are upside down (owe more than its worth) you can go to the lender(s) and ask them about short sales. A realtor who specializes in short sales would be a good person to talk to first. Often the banks will take less money than what they are owed to avoid having to forclose. That is basically a short sale. Yes, you lose your house and don't get any money in the sale, but you keep your credit and do not have a forclosure or bankruptcy to deal with.
2007-07-03 11:10:45 · answer #2 · answered by RiddleMeThis 2 · 1⤊ 1⤋
Losing your home can be a priority for some people. In which case it may be possible to keep your home in bankruptcy. I think the bankruptcy stays on your score longer.
Have you thought about selling?
Bad is the relative term. If you do not need credit then it does not matter. Remember that guy who did not repay the $100-Million unsecured loan from the S&L days? He still feels great!
2007-07-03 11:09:34 · answer #3 · answered by Ron H 6 · 0⤊ 0⤋
sell your home. they are both bad and reported on loan applications for the next 7 years. honestly, i'd rather have a bankruptcy (BK) on my report and keep my house. You'd be surprised how quickly your credit rebounds from BK. You will have 15 credit card apps 1 day after your BK (ch. 7) is finalized. Foreclosure is EXPENSIVE. the bank not only takes your home, but will charge you for all expenses (legal fees, marketing, etc.) incurred by the foreclosure. Then they will place a lein against you and make you repay the difference. BK gets rid of debt not adds to it. BK is not as bad as people think. I can actually get you a home loan 1 day after BK discharge. one day out of foreclosure... good luck. 1 year out of foreclosure... good luck. it takes 3-4 years from foreclosure before banks are willing to let you back in.
2007-07-03 11:11:33 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Bankruptcy is worst, because it stays on your credit for seven years. You don't have to wait that long to buy a house after going into foreclosure.
2007-07-03 11:03:14 · answer #5 · answered by Virgo27 6 · 0⤊ 0⤋
arsenic and cyanide I guess. Both are going to kill your credit; Foreclosure indicates you got over your head on one loan and not your entire credit hsitory.
2007-07-03 11:04:00 · answer #6 · answered by wizjp 7 · 0⤊ 0⤋
Probably not quite as bad but have you tried to deal with the lender. If you work with them an cooperate as much as possible you might ease the situation somewhat.
2007-07-03 11:03:19 · answer #7 · answered by Moondog 7 · 1⤊ 0⤋
both are bad. May be equally. But at some point it will be removed from your credit report.
2007-07-03 12:00:47 · answer #8 · answered by Jo 1 · 0⤊ 0⤋
Maybe a step above...please, please get credit counciling first. I think every city has credit counciling centers funded by HUD. Look it up at www.hud.gov.
2007-07-03 11:02:40 · answer #9 · answered by Lisa 6 · 1⤊ 0⤋