is an uncomfortable subject for a variety of reasons. The most obvious is the
potential havoc it can wreak on your finances. Running a close second is the
negative stigma which is often attached to the process. This negativity is
important to mention because strong emotions can sometimes lead to unsound
financial decisions with devastating results.
a viable option for someone who is “upside down” in terms of cash flow. In
other words, when a person has more money going out each month than coming in,
bankruptcy should be considered if no reversal of this negative cash flow is
within sight. The longer someone waits to explore the various options available,
the more serious his or her situation may become.
One of the worst
things people can do in this situation is to borrow more money to try and pay
off their debts. On paper, this is clearly an unwise financial decision. In the
real world, however, it is very common for individuals to pursue this strategy to
buy time and hold off on filing for bankruptcy. On the surface, this is
certainly a noble notion; however, it can often compound the problem and serves
only to delay the inevitable.
For many homeowners
during this upside-down cash flow, speaking to a qualified mortgage
professional is a much better option. An experienced loan officer can
objectively look at your finances and help you determine if restructuring your
mortgage would not only help, but possibly even alleviate any need for
If bankruptcy is
the only option, seek out a reputable bankruptcy attorney and credit counselor.
A qualified mortgage specialist can provide references for you as well, as he
or she works with these professionals on a regular basis. Reliable references
are essential in this case because experienced professionals greatly increase
the odds of a successful bankruptcy experience. It’s that simple.
When filing for
bankruptcy, be completely honest and accurate regarding every aspect of your
financial situation. This includes any changes to your income which may occur
throughout the process. Bankruptcy is a federal procedure, adjudicated by real
judges, and scrutinized by representatives who coordinate with the Department
of Justice, the FBI, and the IRS.
Here are some additional steps you can take
to make the bankruptcy process as painless as possible:
Tips for Rebuilding Credit:
While it does take time, there is life (and credit) after bankruptcy. Some
mortgage lenders will even lend to you within a year or so after a bankruptcy.
If you’re in serious financial trouble, the trick is to get the help and advice
you need from professionals you trust.
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