Why Many Are Choosing Bankruptcy After Foreclosure

By Michael Hanks

With the amount of foreclosures taking place in the United States, many people are often overwhelmed by the fact they that they can still be sued afterwards. Of course, this depends on which state you live in. However, as many states allow the lender to sue the homeowner who defaulted on the loan for deficiency judgment, many are choosing bankruptcy after foreclosure.

The deficiency judgment is actually the difference between the price of what you owed to the lender and the amount the home was auctioned or sold for. This amount could be thousands of dollars. For example, if you purchased your home for $250,000 when the real estate market was strong and owed $200,000 on it when the bank foreclosed on you, but it only auctioned for $175,000, the bank could sue you for $25,000. Bankruptcy after foreclosure would help you to eliminate this debt.

The downside of bankruptcy, however, is that it can stay on your credit for up to 10 years. A foreclosure is usually only stays on your credit record for no more than 7 years. While it can eliminate your debt owned to the lender, it may not be the best bet for your own situation and could easily prevent you from purchasing another home in the near future.

The upside of choosing bankruptcy is that it will free up your finances and hopefully help you to get on a new financial path. It could help you to have enough money to actually secure a rental property for you and your family or even start saving money for the future purchase of another home of your own.

While many people often choose bankruptcy after foreclosure, the truth is, they do not know whether or not it will actually benefit them. They only think that it is going to be the easiest way out. Before you take that step, make sure you do your research and determine whether it will actually help you out or not. If not, you could be marring your credit record even more for no reason at all.

Are You Considering Bankruptcy After Foreclosure? Visit www.Proper-T-Solutions.com To Learn More Before Taking This Step!

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