If you have explored all the options to avoid foreclosure and nothing has worked so far, filing for bankruptcy can be the last resort to keep your home. But before you flip though the yellow pages and start looking up bankruptcy lawyers in Fargo ND, you should get yourself familiarized with the basic bankruptcy process. There are many myths surrounding bankruptcy filings and it’s important that you face the reality and know your obligations.
Here are a few important things you should know about bankruptcy and its implications on your personal life:
Bankruptcy damages your credit score
You are probably already aware of the fact that a foreclosure can damage your credit score severely. Lenders won’t accept or approve your loan applications for at least seven years even when all you want is to buy a new car. Bankruptcy affects your credit rating the same way. So you are not actually getting a shot at a ‘fresh start’ as most lawyers advertise bankruptcy to be. There are drawbacks which will haunt you for several years. A bankruptcy on your credit report will bring down your credit worthiness and this can have long term implications on your life.
Bankruptcy is a long legal process
Don’t assume that you will be able to ‘get through the process’ in a couple of days. Also don’t assume that you will just walk into a court and come out with a judgement in your favor. Bankruptcy hearings and judgment process can take months, even years to complete. How much time it will take for the process to complete will depend on the type of bankruptcy filing. If you are filing for a Chapter – 13 bankruptcy, the process will take longer than that for Chapter – 7 bankruptcy.
Bankruptcy is a complex legal process
The amount of paperwork that you will need to handle in order to obtain a bankruptcy judgement can be overwhelming. You need to fill out a lot of confusing forms and try to figure out complicated repayment plans and legal responsibilities. A small mistake can have a big impact on the prospect of your obtaining a favorable judgement. Your attorney will help you navigate your way through the legal process.
Lenders can collect debts from co-signers
If you own the home jointly with your spouse or any other family member, you need to know that bankruptcy will prevent lenders from collecting debts only from you. They can still go after other co-signers, particularly if the co-signer decides not to file for bankruptcy. It can create complications in your personal relationships.
Needless to say filing for bankruptcy should be your last resort, not the first choice. If you are trying to avoid foreclosure, a far better alternative is to sell your home even before you receive your first notice of default and the lender initiates the foreclosure process. You can find cash buyers and sell your home as-is to ensure a quick closing. You will not only save your credit score, but also avoid the embarrassment that a foreclosure or bankruptcy filing will subject you to.