For some of us, bankruptcy looks like the only option to get out of debt in anything resembling a reasonable length of time. But deciding to declare bankruptcy is not simple. Repairing credit ratings after bankruptcy is also not easy. Difficult, but not impossible. Even a person who is in the middle to declaring bankruptcy can still qualify for an equity home loan. You need to be aware of some important information about bankruptcy equity home loans. Lenen is an article in Dutch with their opinion.
You can discharge your chapter 13 bankruptcy ahead of schedule by getting a bankruptcy equity home loan. You are given 3-5 years to discharge all debts filed under chapter 13. On special occasions, the debtor’s lawyer can submit a formal request to create an additional debt with the intention of eliminating the original debts more quickly and with a smaller amount of interest.
Once this request is approved, the lawyer can work with various banks to negotiate a home equity loan that you can afford and that will give you enough money to pay off a good share of your unsecured debt.
If the debtor currently has a home equity loan at the time of bankruptcy, you need to be aware that this is a secured debt. This means that the only way to discharge this debt through bankruptcy, under any chapter, is by surrendering one’s property and leaving the home.
This is also the case for any home equity loans received when the debtor is undergoing bankruptcy. If you’re looking to eliminate such a loan you will have to repay it by following the rules you acknowledged at the time you obtained the loan or to turn over your house.
The above information can be a benefit to debtors who are in the midst of bankruptcy. Financial institutions will be more likely to extend a loan to a debtor who owns property that can serve as proper collateral, and will give the debtor a good incentive to pay the money back.
A bankruptcy equity home loan can also provide the basis on which to begin rebuilding good credit when one emerges from bankruptcy. This is true as long as you consistently make your payments on time. When a person does this, a bank will report it to all the major credit reporting agencies as a positive mark, which will cause your credit score to increase.
Getting any kind of credit in the midst of bankruptcy is nothing short of challenging, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It is a way for a person to pay of creditors faster than could have otherwise been done. The monthly installments will also be lower since the debtor will have more than the normal 36 to 60 months in which to repay the loan entirely. All a person has to remember when using this option is that if the loan goes into default for lack of payment, the home and/or property that was used to obtain the line of credit will be taken.