The news is still reporting doom and gloom for the financial future of the US. Many financial experts are worried about inflation being a problem as commodity and fuel costs continue to rise. With this gloomy future, experts predict that the filing of bankruptcy cases will continue to increase through 2011 and even past 2012. Real estate prices are continuing to drop and the feds just reported that unemployment went up to 9.8%. With all this bad news, the government continues to discuss how to bail out the economy to keep homeowners from going into foreclosure. Many individuals are suffering with lower wages and higher living expenses forcing them to take a serious look at filing bankruptcy. With many Option Arm mortgages starting to adjust, many homeowners will be faced with the reality of not being able to afford their payment. Homeowners already under financial strain will have to consider the option of bankruptcy to stay out of foreclosure. Some of these homeowners have been trying to negotiate a mortgage modification with their lender. Lenders tend to be more willing to work with debtors nowadays because defaults and foreclosure rates have been so high. The downside of mortgage modification is that recently a report came out stating that only 10% of all loan modifications applied for went through.
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Since the mortgage meltdown started back in 2007, there have been a record number of individuals losing their homes to foreclosure. Because of this crisis, there also continues to be record numbers of Americans having to file for bankruptcy. The housing crisis affects many people and some indirectly. Renters have been forced to vacate a lease property with no notice because the property was foreclosed on by the lender. These tenants that were evicted can be financially damaged severely, since the costs of relocation can be prohibitive. Putting people that are already in a fragile financial state, just a small thing will push them over the edge and can put them in bankruptcy. The federal government says they will continue to work to stop foreclosure, but if that trend continues as it is going, the losses to the banks and homeowners could derail the entire economy.
Nowadays, in many circles, foreclosure has become a dirty word. The banks already have so many properties on the books, they don't have the resources to foreclose on more. First of all, the lender has to take the foreclosed property and fix it up to make it marketable. In this bad economy, it's still hard to sell the house. According to statistics, when a bank has to foreclose on a property and liquidate it, the costs can go into the six-figure range. When keeping this in mind, many lending institutions are now willing to negotiate with homeowners even when they're in a bankruptcy filing.
Although Chapter 7 bankruptcy was not really designed to stop foreclosure, it will stop it temporarily and sometimes will allow an individual enough time to work out something with the lender to keep their house. Chapter 13 bankruptcy on the other hand, is almost a perfect fit to stop the foreclosure and negotiate with the lender the back payments. This will allow the debtor to get caught up over a 3 to 5 year period and keep their home. Depending on your situation, it's usually good to seek the advice of a bankruptcy attorney to evaluate your situation. Bankruptcy might not be for you, but you won't know until you learn about it.
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