In all honesty, both of these options will hurt your credit score, but you have to look at your specific scenario to decide which option is better for you at this time. A foreclosure stays on the credit report for seven years. A bankruptcy will stay on the report for 10 years. However, this is not the only factor that should be considered when deciding which path to take.
In the eyes of mortgage lenders, foreclosure if far worse than a bankruptcy without the home included. Point being, if you plan on buying another home anytime soon, you are probably hurting your chances of being able to find a lender to back the mortgage, at least one that will offer terms that are anywhere near being reasonable. …More Free Bankruptcy Help
Just because the situation seems dire does not mean that you cannot avoid the foreclosure. As we have said many times, today’s economy has changed the mindset of lenders to be more open to renegotiating terms with consumers that are struggling. If you have received notice that the bank plans to move forward with a foreclosure, it is time to sit down and put some serious thought about what you plan on doing.
Once you receive the notice, you will still have several months to “fix” the situation. Your first decision is if you actually want to keep the house or not. If you do, you need to immediately contact the lender to try to work out a new agreement with them. In most cases, you will have a couple of options to pursue:
? Rework Terms – you may be able to rework the terms of your initial mortgage to a new plan that will help you get your payments back on track. This may mean a lower interest rate or extending the mortgage to a longer term but lowering your monthly payments. Lenders will sometimes fold the missing payments into the principal and then redo the entire mortgage so you are able to make timely payments.
? Forbearance – in essence, this suspends payments of the mortgage until you are able to pick them back up again. You are more likely to be approved for something such as this if you can prove a hardship, something such as an injury where you are unable to work or loss of a job.
If you go this route, keep in mind that these options will not work if you are in way over your head with your other bills. If this is the case, but you do want to keep your home, you can consult a bankruptcy attorney and file for bankruptcy while leaving the home out of it (and still attempting to rework the terms). With your other debt eliminated, you should be able to once again manage your payments and at least have your home mortgage to re establish your credit rating.