Mortgage Loans – Mortgage Loan

Do you know the Bankruptcy Chapter 7 Rules?

The most common form of bankruptcy is known as bankruptcy chapter 7 in the united state. There is some description of process of liquidation under the lows of bankruptcy of the united state. This type of bankruptcy may be filled by an individual who have no dismissed cases for bankruptcy within 180 days and a business may also file Chapter 7 bankruptcy if the business is unable to pay off its creditors and bad condition debt collection. Generally bankruptcy is happen only when the debtor has no property to sale to repay his debt and he passes the entire chapter 7 qualifying process of bankruptcy.

The Chapter 7 bankruptcy is a process of several criteria. According to the new amendments the debtor has to pass now the means test which is a two steps process of calculation of debtor’s income. The first step of means test is the comparison between debtor monthly income and median income of the state. If the monthly income is less then median income of the state, the debtor can qualify for bankruptcy filling and if his monthly income is higher then median income, he must has to go for the second step of the qualifying process which is the calculation of debtor’s last 6 months disposable income . If the debtor’s 6 months disposable income is less then $ 6,000, he passes the means test and he can file a petition for bankruptcy.

The Chapter 7 bankruptcy is now very famous as liquidation bankruptcy. But before filling it a debtor must has to consult with any bankruptcy attorney who can help to qualify bankruptcy according to the state law.

Debt settlement and bankruptcy both are debt relief options. These options are chosen when an individual had stuck deep in debt and looking to get out of it. When a person is knee deep in debt meaning he/she has no sources of income to clear the debt in a fair way. Hence, one has to look for debt relief options to become debt free.

Debt settlement and bankruptcy, each has its own advantageous and disadvantageous. Before taking decision to choose one particular, it is very important to know about each option and how one differs from other.

The main difference between debt settlement and bankruptcy is that, debt settlement is an agreement between you and lender that is taken care of out the court steps whereas the bankruptcy is legal procedure that is taken care of attorney inside the court steps to discharge liability.


If bankruptcy is filled perfectly and one who files qualifies for it, the court can order or enforce the creditors to discharge the debt. In general there are two types of bankruptcies for consumer to file. They are chapter 7 and chapter 13.

Chapter 7 bankruptcy is to be filled when you want to eliminate debt and chapter 13 to restructure debt into a repayment plan based on how much the debtor can repay, not necessarily the whole amount the debtor owes. According to earlier laws of bankruptcies laws, a person who files bankruptcies will manage to discharge whole debt that he incurred till then but recent laws that amended do not allow to discharge some debts like student debt secured by federal government, taxes etc.

In addition, the bankruptcy filled will be reported to credit rating agencies and that will stay on your credit report for at least 10 years. Bankruptcy on your credit report will have negative impact on your credit score and as a result your future credit will be impacted.

On the other hand, debt settlement is a process that is carried out of court agreement made between debtor and creditor. The agreement is made for the benefit of both the debtor and creditor. With debt settlement, the debtor will not manage to discharge the debt as in case of bankruptcy instead a repayment plan that is in favour of all the creditors of debtor will be made. For debt consolidation to work, it requires that each and every creditor must agree to debt settlement and its repayment plan terms.

Debt settlement in the same way as bankruptcy will be reported to credit rating agencies. Debt settlement will remain on your credit report for 7 years. It is natural that credit score will be impacted in either of the option and if you are in such a position to opt either of the option, then you are already half way down of your credit score and at the same time with any option total debt will not be discharged.

Since the impact of debt relief options is much less than bankruptcy and they are easier for you to handle the procedure. Choosing the debt relief option enables the lender to get some amount from you instead of walking away will all the debt.

How to avoid foreclosure?

You can avoid foreclosure if you are aware what are the means to avoid foreclosure. Foreclosure is the worst possible financial condition. Once you face foreclosure, it drops your credit score by 250 to 300 points and foreclosure is shown in your credit report for almost 10 years. How to avoid foreclosure is a question that many people wants to know in this financial crunch. You may have taken a big amount of loan even with higher interest rate to buy your dream home. But now it seems to you impossible to make the monthly mortgage payments and it seems that foreclosure is knocking at your door.

If you have missed 2 or 3 months monthly mortgage payment and got the letters from your lender, then please do not ignore those letters and do not avoid the lender. If you avoid the lender then you may not be able to avoid the foreclosure. As soon as it seems impossible for you to make monthly mortgage payments or any difficulties, call your lender or meet him to inform then problems that you are facing.

Your lender is the best person to help you out in this position. Believe me, no lenders wants their clients to face foreclosure. They will help you at their best if you inform then your problems. Ask your lender if there is any alternative option available for you to avoid foreclosure like forbearance, reinstatement, Short sale, deed in lieu of foreclosure etc.

Some people even files Bankruptcy to avoid foreclosure. So please do not delay. You should take quick actions when it seems difficult for you to make the mortgage payments

Discuss bankruptcy filing option and San Diego Foreclosure Services with a reliable law firm.

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