What About Your Credit Score?
Determining what your present credit score is can assist you in making a better choice when it comes to bankruptcy vs foreclosure. In most but not all circumstances, foreclosure impacts your credit less negatively than bankruptcy. It is essential to find out for certain. On occasion your credit score can increase less than a year after you file bankruptcy. If you have been weighed down by credit troubles, bankruptcy can be a great means to remove them so you can seek to restore your credit. If you have sacrificed making other payments in order to attempt to make your mortgage payment, your credit has not merely been hurt by any delinquent payments to your mortgage lender but additionally by the other lenders you have missed payments with. Perhaps your mortgage is the lone payment you have been behind on and your other debt is minimal. If this is true for you, foreclosure might be the preferable option.
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Looking at All of Your Debt
If you owe many thousands of dollars in credit card debt, personal loans, or medical loans as well as your mortgage debt, the better alternative in the bankruptcy vs foreclosure argument might be bankruptcy. Bankruptcy generally allows you to wipe out all of that debt. It will compel you to live on the income that you earn and to adjust the way you handle money. There are specific types of debt such as student loans and overdue taxes that commonly can not be discharged in bankruptcy. If these types of debt make up the majority of your other debt, bankruptcy may not assist you. If the other debt you have is rather small, foreclosure might be the better choice for you. Repaying your other debt on time and in full can aid you in rebuilding your credit more rapidly after foreclosure.
Existing Income
You ought to know earnings regulations regarding bankruptcy. Each state has a separate median earnings level that you have to be below in order to file for a chapter 7 bankruptcy. This income level criteria is critical to the bankruptcy vs foreclosure discussion. The U.S. Department of Justice has a active list on their website of norm earnings levels for different states. The size of your household also plays a part. If your mortgage bank turned you down for a workout agreement for the reason that you earn too much money, the same might be true of bankruptcy. In this instance, your single alternative might be to allow your lender to foreclose.
Asking a bankruptcy attorney is the top way to discover what bankruptcy can and can't do for you. A terrific lawyer should be able to inform you if you possess loans that do not meet the requirements for bankruptcy and if your income level is too much. They may be able to run a credit check for you to understand what your existing credit score is and advise you how much bankruptcy will affect your credit score.
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