There are two major reasons why individuals and couples file for personal bankruptcy – too much credit card debt and the threat of foreclosure. Sometimes it’s a combination (often, actually), and bankruptcy offers debtors the opportunity to cancel out their credit cards and to channel their funds into their mortgage. Waiting for that foreclosure notice can be a really stressful time, however, that is about to change for many people.
If you have an FHA-backed loan and you’re out of work, the current mortgage default period is four months. President Obama released a press release on Friday announcing that this four month period was being extended to twelve months. This means, if you are unemployed, you can skip your repayments for twelve months before the threat of foreclosure starts.
This has two effects for most people in this group – it helps to save your home and frees up your cash flow so you can concentrate on paying down those bills that have been worrying you. These are two important factors. Being evicted from your home will place you into the rental market, and those prices are now generally more expensive than mortgage payments.
If foreclosure is a possibility, talk to a bankruptcy lawyer. You may be eligible for one of the foreclosure programs that are available. If not, bankruptcy may then be your best option. Your lawyer is the best person to help you assess your current situation and to advise you on the best path to take. They can also help you contact the appropriate departments if you are eligible for any foreclosure relief programs.
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