Monday, January 24, 2011

Facing Foreclosure? Bankruptcy Should Be a Last Resort

When faced with foreclosure, more and more homeowners that I speak with think bankruptcy is their only option to either extend the time they can stay in their home, or avoid a deficiency judgment. Unfortunately, they are mistaken. Bankruptcy, in most cases, should always be a last resort and any experienced bankruptcy attorney should tell you that.

I explain there are other options including short sale, mortgage modification, deed in lieu or setting aside the foreclosure judgment. Often times because they are in a panic to save their home a homeowner will file for bankruptcy protection without thinking of the consequences. A bankruptcy will stay on your credit report for seven years, significantly lower your credit score and place you in a negative credit light. In addition, there is still a stigma that is attached to bankruptcy. Some employers will hesitate to hire someone with a poor credit score or bankruptcy filing on their credit report.

We are bombarded with advertisements from bankruptcy attorneys touting bankruptcy as the end-all solution to financial problems. I suggest that you talk to a foreclosure defense lawyer to find out how they can help. Get a full run-down of your options, and you may find out that you can save your home and avoid bankruptcy at the same time. Most foreclosure defense attorneys offer a free initial consultation.