The Truth About Bankruptcy Equity Home Loans
For some of us, bankruptcy looks like the only option to get out of debt in anything resembling a reasonable length of time. Making this decision is very difficult. It can be even more difficult to establish credit after declaring bankruptcy. It’s hard, but possible. An equity home loan is a certain kind of credit that is available when going through a bankruptcy. There are however, some facts regarding bankruptcy equity home loans that people should be made aware of.
Bankruptcy equity home loans can be used to discharge a chapter- bankruptcy ahead of schedule. When declaring a chapter-, you are allotted between 36 and 60 months to satisfy all debts. On special occasions, the debtor’s lawyer can submit a formal request to create an additional debt with the intention of eliminating the original debts more quickly and with a smaller amount of interest.
Once this request is approved, the lawyer can work with various banks to negotiate a home equity loan that you can afford and that will give you enough money to pay off a good share of your unsecured debt.
If the debtor currently has a home equity loan at the time of bankruptcy, you need to be aware that this is a secured debt. Essentially, secured debts can only be eliminated through any form of bankruptcy by turning over the debtor’s house to the bank.
This is also true for any home equity line of credit that is established while declaring bankruptcy. The only choices you have to get rid of this debt are to pay it back in full according to the terms agreed on when taking out the loan or to turn your property over to the lender.
This is a fact that can come in very handy for a homeowner who is filing bankruptcy. Financial institutions will be more likely to extend a loan to a debtor who owns property that can serve as proper collateral, and will give the debtor a good incentive to pay the money back.
A bankruptcy equity home loan can also provide the basis on which to begin rebuilding good credit when one emerges from bankruptcy. As long as the loan payments are made consistently and in a timely manner, this will be reported to credit reporting agencies as a positive mark on one’s credit report and will increase the credit score.
Even though obtaining credit while one is in bankruptcy is difficult at best, a bankruptcy equity home loan can be the step up that a person needs to get back on track and emerge from the bankruptcy in a better position than would have been thought possible. It is a way for a person to pay of creditors faster than could have otherwise been done. The monthly installments will also be lower since the debtor will have more than the normal 36 to 60 months in which to repay the loan entirely. All a person has to remember when using this option is that if the loan goes into default for lack of payment, the home and/or property that was used to obtain the line of credit will be taken.
John loves to blog about subjects like getting a home loan in bankruptcy and getting a home loan in bankruptcy on her blog.
Related posts:
- Home Equity Loans – There’s Gold In That There House
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- Home Equity Loans 101
- File Bankruptcy Without a Lawyer – a Wise Choice?
- Home Equity Line Of Credit: Do You Really Want One?
- Is A Fixed Rate Home Equity Loan What You Need?
- Myth: Filing For Bankruptcy Means Losing Your Home
- Things You Should Know About Filing For Bankruptcy In Michigan
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