Monthly Archives: January 2014

2nd Mortgage Loan After Bankruptcy – Understanding The Basics

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Getting a 2nd mortgage loan or home equity loan after a bankruptcy is workable. However, loan applicants should be aware of certain disadvantages to bad credit loans. A bankruptcy is destructive to credit scores.

In reality, many financial experts discourage bankruptcies. Those who file Chapter 7 or Chapter 13 are subjected to higher finance rates on homes, cars, etc. Before applying for a 2nd mortgage, know what to expect and understand the basics of getting a reasonable rate.

Expect Higher Finance Fees or Interest Rates

After a bankruptcy, many people are hesitant to apply for credit. They expect higher rates, which will also increase monthly payments. However, obtaining new credit accounts is crucial to re-establishing and building credit history. On the other hand, getting a lender to approve a credit card application after a bankruptcy is challenging. For this matter, some people choose to get a 2nd mortgage loan.

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Bankruptcy Explained

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Whether or not we want it to or mean it to, often times our debt can become out of hand, to the point that we can no longer control it. It does not occur because we expect it, it occurs because we live in an age where credit is everything. In fact, many people do not even accept cash for a variety of things, for example, online shopping. All online shopping opportunities takes credit cards only. We will use credit for so many different items, that before we know it we begin to become overwhelmed and have the inability to pay the credit when the time comes.

When it comes to bankruptcy, this means that you are legally declaring that you have the inability to pay your creditors. Bankruptcy was formed in efforts to allow the debtor to have a fresh start within their life, this will allow the debtor to be relieved of most of the debts they have incurred. Additionally, bankruptcy gives creditors some rights as well, because it can allow them to recoup some of their money to the extent of the debtors ability to pay. There are various laws in place that allow the debtor to make use of non-exempt property in efforts to pay the creditors. Many pieces of your property will be exempt; however, it is possible that you have some non-exempt items.

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Home Equity Loans After Bankruptcy – Choosing A Low Rate Lender

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After a recent bankruptcy, your loan options are limited. Those needing quick cash for home improvements, wedding expenses, or college tuition may be unable to secure the necessary funds. However, if you own a home, getting approved for a home equity loan following a bankruptcy is a realistic option.

Understandably, banks and credit unions are reluctant to approve an unsecured loan or credit card application. Because home equity loans are secured by your property, lenders are more equipped to take a gamble. However, if the loan cannot be repaid, you will lose your home.

Benefits of a Home Equity Loan

Homeowners obtain home equity loans for various reasons. In fact, some apply for these loans in an attempt to avoid bankruptcy. Home equity loans are perfect for debt consolidation and paying past due utility bills. The interest rates are typically lower than credit cards and most consumer loans. Thus, home buyers are able to payoff debts, improve credit, and save money at the same time.

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Types Of Bankruptcy Situations

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Moving into the twenty first century, many Americans aren’t sure of what to expect.  Many businesses have begun to outsource labor to Mexico and India.  With the loss of jobs comes unemployment to the employees.  Most people caught up in a company’s decision to search for lower waged employees cannot find suitable jobs in the same geographic area in which they live.

They have worked at a job for many years and had higher wages.  Finding new work with the higher wages is almost impossible.  This can begin to have a financial impact on the family and having bill collector’s call only adds to the already stressed out situation.  One option that people may decide on is choosing to file one of the types of bankruptcy.  For the homeowner there are two different types of bankruptcy.

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