Chicago Bankruptcy Proves Valuable for Struggling Homeowners in City’s Fragile Housing Market

Chicago suffers from one of the most fragile housing markets in the U.S, according to a report by the Treasury Department.

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As much as 35 percent of all sales in the Windy City involve distressed properties, a statistic significantly higher than the national average. To make matters worse, sales of foreclosures are exerting downward pressure on the prices of neighboring homes.

It's been estimated that nearly half of all Chicago mortgages are underwater, a situation in which homeowners owe more on their loan than their home is worth.

Another factor that makes Chicago unique is the time it takes to process those foreclosures. While it takes most homes in the U.S. 348 days to move through the foreclosure pipeline, Chicago homes take an average of 575 days.

That's bad news for everyone. For most homeowners, a longer foreclosure process doesn't buy more time; it only puts off the inevitable, taking a greater financial and emotional toll on property owners as the bank works to take their home.

For nearby homeowners, long foreclosure processes mean more vacant properties in the neighborhood - and more eroded home value.

The report was accompanied by data from the Home Affordable Mortgage Program. Of the 1.8 million who had been offered trial loan modifications in the program - just a small portion of those who need help, mind you - just over half received a permanent modification.

What about those who didn't qualify - or the many who weren't eligible to apply in the first place?

For many underwater homeowners, filing for bankruptcy in Chicago is the most realistic way to escape a seemingly hopeless situation.

If you have negative equity on a first or second mortgage, Chapter 13 bankruptcy grants the ability to restructure overwhelming debts and late payments over a period of 3-5 years. As long as you can make timely payments, you can keep your house.

Not everyone qualifies for a mortgage refinance or loan modification, especially when busy and disorganized banks refuse to work with homeowners. But with Chicago bankruptcy, everyone can be given a fair chance.

A Chicago bankruptcy lawyer can evaluate your financial situation and determine your best course of action. To speak with a Chicago bankruptcy attorney, call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today for a free debt analysis.

More Blog Entries:

Homeowners Struggling to Close Short Sales in Chicago May Want to Consider Bankruptcy: March 13, 2012

Chicago Bankruptcy Prevents Foreclosure, Even If You Make Major Mortgage Mistakes: December 31, 2011

Additional Resources:

Chicago Area Housing Market Is 'Fragile,' by Mary Ellen Podmolik, Chicago Tribune

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