Avoiding bankruptcy if at all possible will help you to save your good credit score greatly. No one should go bankrupt lightly. The consequences are too serious. Foreclosure, the equally malevolent cousin, has equal negative vibes. The difference here is that you may loose your home if it must be sold in a Court ordered, foreclosure sale. In a bankruptcy the debts that are erased are all unsecured debts such as credit card debts, lines of credit, personal loans, fines and penalties. Foreclosure and bankruptcy are harsh conditions. They lower your credit score for six years.
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Bankruptcy is a legal provision that offers relief to Debtors. You'll have the opportunity to get out of a very tight financial bind and start all over again. Simply put, the Debtor admits that debts owed are much greater than income and assets. He/She throws in the towel and seeks bankruptcy, for debt relief as a financial time out. But wait you have help.
You can search for government legislated, debt relief options. You must learn about debtors rights and protections prescribed by law. They have answers for those burdened by credit card bills, excessive debt and foreclosure. Several Consumer friendly Companies will assist you. But you must be careful to ensure that the Adviser is really on your side.
Generally, the Debtor must be examined by a Bankruptcy Trustee. The Trustee's job is to look for any assets held by the Debtor and to divvy up those funds and hand them over to the various Creditors. Having said that, these same provisions from the Superintendent of Bankruptcy must leave the Debtor with minimum living allowances you may be surprised to hear.
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Although it is wise to avoid foreclosure and Bankruptcy, it may be possible to keep the matrimonial home after declaring bankruptcy. This may be possible because the Family Home, also called the "matrimonial home" is considered common property, owned jointly by both Spouses. If one files for bankruptcy, rights of the other could help to protect the home. Please co not abuse this tiny bit of information. you need professional advice here.
In some cases, the home could remain in the hands of the Debtor if the equity is below $30,000.00. But you must keep on making all mortgage payments. Assuming both spouses are involved in the bankruptcy proceedings, legal provisions in the settlement of the debts of Bankrupt allow each spouse to retain $15,000.00 of equity in the matrimonial home. You need specialized advice before acting on any of these suggestions. Contact Us and we can recommend good bankruptcy Advisers.
Even though you owe Unsecured Creditors as much as $75,000.00, for example, a Bankruptcy Trustee must leave the home alone if the Debtors could afford to pay the mortgage and if the Mortgage Lender is not calling the mortgage loan into foreclosure.Other personal assets are also exempt from seizure in the event of a bankruptcy. These include:
Your RRSP if your Beneficiary is acceptable
Household personal effects
Clothing and furniture
Personal jewelry if not expensive
The family car, especially if needed for work
You could save these Other Assets if you are a potential Bankrupt. Personal belongings that can be seized and sold to pay Creditors include:
Savings, Chequing and other Bank Accounts
Investment Accounts; Stocks, Bonds and Mutual Funds
Life Insurance with cash value, where the Beneficiary does not meet specific guidelines.
For example, an Annuity Segregated Fund or a Universal Life Insurance Policy could be exempt if you name the beneficiary. And the rule is stronger if the named beneficiary is a dependent child, Parent or Grand Parent of the Debtor.If, in your original application to the Insurance Company, you designated the beneficiary to these assets as "Estate", the Trustee may order the assets sold for distribution to valid Creditors. The Beneficiary must be named. And that beneficiary must be a very close relative.
In a bankruptcy therefore, the Trustee acts as an Officer of the Court. She or He would usually be fair in leaving with you as Debtor, a stated minimum income,
Personal effects,such as clothing and furniture
The car, if it is used for transportation to work
And the family home if the equity does not exceed $30,000.00 and Mortgage Lenders are not calling the mortgage loan.
It is important for you as Debtors to know your rights. Often, such Debtors are extremely vulnerable at this time. Some Trustees, who may not fully understand the latest government guidelines may hold back on some items and may hand over assets that should properly remain with the Debtor. The Trustee's ruling is usually final. It is more common that the Creditor would be obligated to accept pennies on the dollar as settlement of their unsecured debt. In the meantime, the Debtor gets a chance to start again to rebuild their shattered finances and lives. In spite of its harmful effects, a bankruptcy is the last resort to give you a fresh start when you are faced with a severe financial crisis. You should not abuse this privilege. In fact false statements and questionable transactions could be classed as fraud and you could be punished for breaches.
Steps to Avoiding Foreclosure
Foreclosure is usually the result of the loss of a job, severe illness, an accident or even death. Should you be faced with any such catastrophe, you would be happy to know that all is not lost. The bad news is that the lender is in the driver's seat because the mortgage is a secured loan. They could force you to vacate the property with the order of the court.The good news is that with the proper foreclosure coaching, you could find relief. Here are some of the techniques and opportunities for you to save your home from foreclosure using creative financial solutions:
How Do You avoid foreclosure!!
1. Negotiate with the lender a more affordable payment schedule.
2. Get a Second or Third Mortgage to avoid foreclosure.
3. Get new rental income by renting to family, friends or strangers.
3. Invite an Investor to become a part owner of your property.
4. Sell at easy terms to a new Owner before the costly foreclosure process completes.
5 Sell to an Investor and buy your property back on a rent to own basis.
6. Change the use of your home to a rooming house, a Bed and breakfast or some higher use that gives you extra monthly income.
7. You could take in Students or other boarders, including becoming a foster parent where you are paid by the state to look after Wards of the State.
The options in a bankruptcy are endless. You must think the situation through. Or, get help from a creative foreclosure professional. The fact you are stressed and you feel pressure to find an immediate solution quite often prevent you from finding the best solution. There is always some way that will help you to keep your most valuable asset, your home, in your family, instead of loosing it in foreclosure.
COMPLETE THE FORM BELOW TO ASK YOUR MOST DIFFICULT DEBT CRISIS QUESTION. OUR FORECLOSURE EXPERTS WILL OFTEN FIND A SOLUTION YOU DID NOT THINK OF.
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