Foreclosure or bankruptcy

Question

My best friend in pretty close to loosing her home to foreclosure, not only this but she is pretty deep in debt as well with bad credit. we were debating which is better for her Forclosure or Bankruptcy. I wish i could help her because she will have to move away from me if her house is foreclosed upon but at the same time i hate to see her credit get any worse by making the wrong choice in this matter.

thanks for your help ahead

Answer 1

maxmom56 is correct...If your friend loses her home to foreclosure, they will bill her for the deficiency balance leading her to file for bankruptcy anyways...The will sue, get a judgement and garnish wages, and/or bank accounts, leading to the bk filing. She needs to contact a bankruptcy attorney in her area asap!  Most bk attorney's will see you on a free consultation. They will need to see her last 6 months of pay stubs, assets, a list of all debt and the last 4 years of taxes. After reviewing all of this they will be able to tell her what she qualifies for. The attorney as well can tell her what she can stop paying on to come up with the retainer fee they will require to file. The house can be re-affirmed in a chapter 7 bankruptcy, but the loan needs to be current. If it's not current it can be saved in a chapter 13 plan, paid thru the US Bankruptcy court trustees,who handle the chapter 13 for the length of the filing which runs 3 or 5 years. The payments are deducted from paychecks however she gets paid, and sent to the trustee, the secured debts get paid first and the unsecured last. My best advice is to contact a bankruptcy attorney and see what they can do to help her from having her home go into foreclosure and getting this back on track for her. Good Luck!!

Answer 2

Well, either way she will have a bad mark on her credit for 10 years. She needs to look at her finances and see which route will be best. Since they have changed the bankruptcy laws, it's not an easy out anymore. Good luck.

Answer 3

She may be facing both.  If the bank forecloses, it gets the house.  Your friend still owes the balance of the mortgage.  If the bank sells the house, the purchase price will be applied to that balance as well as to the fees, penalties and interest that have been mounting up.  Whatever is left, your friend owes to the bank.  It will be up to the bank to decide whether to sue her for the balance.  And then she apparently has other debt that is overdue.

The only way to get out from under all this is probably bankruptcy.  Most bankruptcy lawyers offer the first appointment for free.  Your friend should go talk to a few of them.