Chicago Bankruptcy Prevents Foreclosure, Even if You Make Major Mortgage Mistakes

When some people consider bankruptcy, they think about going through a process where debts are forgiven and the prospect of having to give up some or all of their property and other assets.

But there is a form of bankruptcy in Chicago that could help people who want to keep their homes, cars and other possessions.
Under Chapter 13 bankruptcy in Chicago, consumers are allowed to have some of their debts forgiven. But they must set up a payment plan that typically lasts between three and five years to pay back some of the debt.

Once the plan is completed, the balance of the debt owed is wiped clean. Chicago bankruptcy lawyers have seen many consumers helped by this form of bankruptcy, as they are able to stay in their house and still have their debts cleared. In many cases, Chapter 7 filers can stay in their homes and keep their debts, too. Each case is different.

One major benefit of bankruptcy in Chicago is that filing immediately stops a foreclosure. This is particularly important when considering our current real estate market both in the Chicago metro area and statewide. Prices are down and foreclosures are up and the values of homes have dropped considerably.

Whether you have missed one mortgage payment, five payments or your house is scheduled to be sold at auction immediately, bankruptcy can help. Simply filing for bankruptcy will immediately stop your house from being taken away.

Once you go through the bankruptcy process, you may be able to regain possession of the house after all is said and done. Chapter 13 bankruptcy can be helpful in certain situations, even if you make some mistakes with your mortgage.

Here are some tips from a U.S. News & World Report article that may help you avoid major mistakes with your house:

Check your credit: Not checking your credit can lead to high interest rates or strip you of the chance to get a mortgage at all if your credit score is below standard. Save yourself time and disappointment ahead of time.

Stick to one loan: Avoid taking out another line of credit while seeking a mortgage loan. This, too, can affect your credit score.

Look at the total house payment: Principal, interest, taxes and insurance goes into your payment. Look at all aspects.

Payment history: Make sure you have a history of making payments on time.

Employment history: Job hopping can hinder your mortgage rate.

Preparation is key: Make sure you get pre-approved before you apply so that you know you will qualify for a mortgage loan.

Shop around: Don't just take the first rate you get approved for. Look at different lenders to find the best option for your situation.

Too good to be true?: Get the best rate, but don't chase any deals that seem great.

Lock your rate: Fixed-rate mortgages are important because those that adjust can cause major problems.

Read your loan documents: Take the time to look at closing documents and don't just assume everything works for you. Ask questions.

If you need to speak to a Chicago bankruptcy attorney call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today for a free debt analysis. Call 800-440-7235.

More Blog Entries:

Homes Can Be Foreclosed, But Banks Can Come After You For Difference Without Chicago Bankruptcy: November 28, 2011

Additional Resources:

10 Major Mortgage Mistakes to Avoid, by Colin Robertson, US News & World Report

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