While More Underwater Homeowners Are Making Payments, Delinquent Borrowers Can Still Benefit from Chicago Bankruptcy
The statistics are startling: 16 million U.S. homeowners - or one of three people with a mortgage - owe more on their home loan than their house is worth.
In Chicago, those numbers are even higher. Just over 41 percent of owner-occupied homes with a mortgage have negative equity, according to MSNBC.com.
Yet despite the bleak data and stories of homeowners who walk away and mail their keys to the bank, the reality is that most borrowers are still managing to make mortgage payments.
In the Chicago metropolitan area, 12.7 percent are delinquent by 90 days or more. Nationally, delinquencies fall to just 10 percent. While still not ideal, the numbers are more encouraging than what's often reported in the media.
As our Chicago bankruptcy attorneys pointed out earlier this month, it's usually our debt - not our loss of home equity - that is the problem. Folks who borrowed against home equity or maxed out credit cards when the real estate market was booming are most likely to fall behind on payments today.
The good news is that, unless you plan to put your house on the market, its current value doesn't mean much.
However, because negative equity discourages home buyers, it impacts the home market - and the overall economy.
While it's not possible to boost home values, it may be possible for homeowners to boost their income - therefore making mortgage payments more affordable - by reducing debt.
Filing for Chapter 13 bankruptcy in Chicago provides borrowers the opportunity to restructure debt, often reducing or eliminating the amount of unsecured debt that must be paid back to creditors.
Meanwhile, a legal action called an automatic stay protects against repossession and stops foreclosure proceedings that have already begun.
With fewer monthly bills, it won't matter what Zillow says your home is worth. For many homeowners, bankruptcy provides much-needed financial - and emotional - relief.
To learn if Chapter 13 or another type of bankruptcy is right for you, call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 for a complimentary personal debt evaluation with one of our experienced Chicago bankruptcy attorneys.
More Blog Posts:
Too Much Borrowing, Not Loss of Home Equity, Is Root Cause of Debt in Chicago: May 8, 2012
Growing Consumer Denial About Overspending Contributes to Debt, Chicago Bankruptcy: May 18, 2012
Additional Resources:
One in Three Mortgage Holders Still Underwater, by John W. Schoen, MSNBC.com