Although many homeowners look to bankruptcy as an alternative to foreclosure, it is only a temporary solution. Based on our personal experience helping hundreds of homeowners, it is my opinion that in most cases bankruptcy is neither a necessary nor beneficial means of avoiding foreclosure.

There are two main types of bankruptcy; chapter 13 which forces your debtors to accept a payment plan, and chapter 7 which involves liquidation of your assets to satisfy debt.

Both types of bankruptcy are promoted as ways to avoid foreclosure, but because of the consequences that can arise from filing bankruptcy, other options should be considered.

I generally do not recommend a chapter 13 bankruptcy as a means of avoiding foreclosure. Creditors, especially lenders, do not need to be forced into a payment plan. Most creditors will be glad to allow you to set up a payment plan; all you have to do is ask them. By doing this they avoid the cost associated with the foreclosure process.

There are some cases where a chapter 13 bankruptcy may be in the homeowner’s best interest. If the homeowner has numerous debts in addition to their mortgage, it may be overwhelming or impractical to structure payment plans with each of them. In this case a chapter 13 bankruptcy might be beneficial, but I would only recommend it if your credit has already been destroyed. Under those circumstances a chapter 13 bankruptcy would allow the homeowner to rebuild their credit as long as they keep up on their payment plan.

Caution should be used when deciding to use a chapter 13 bankruptcy, however. I have seen many homeowners get behind on their chapter 13 payment plan. When this happens the lender continues the foreclosure process from the point where they left off. This leaves the homeowner further in debt, homeless, and with both a bankruptcy and a foreclosure on their credit report.

I recommend avoiding the use of a chapter 7 bankruptcy, because the home can be sold along with other assets in order to pay off creditors. This can leave the homeowner homeless and without money. Like Chapter 13, there are a few cases where a chapter 7 might make sense. If the property is upside down or overleveraged and the lenders are unwilling to settle for less than what is owed, an investor won’t be able to purchase the property. If the homeowner is faced with losing their house anyway, a chapter 7 could be used to avoid having the foreclosure affect credit.

Over the past six years, I have helped hundreds of homeowners not only avoid all of this, but I have often helped them walk away from the situation with enough money for a fresh start, and helped them rebuild their credit.

A property, even one with little or no equity, can be sold to an investor for cash. The homeowner can sell the property to an investor leaving the existing financing in place. Doing this will create value to the investor and, in most cases, the homeowner can walk away from the situation with enough money for a fresh start. The investor would then cure and reinstate the mortgage by making up the missed payments. This helps the previous owner by keeping a foreclosure off their credit, and as the investor makes the monthly payments, it also helps to rebuild their credit.

Before filing bankruptcy all alternatives should be looked at and considered carefully. If you feel your financial situation is not going to change or you’re uncertain about making payments on a payment plan, look for an alternative to bankruptcy. Call me anytime for a free consultation.

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We believe that in a good business deal all parties walk away happy. We won't take part in any deal that falls short of this. We are private investors who value honesty, good old fashioned work ethics and pride ourselves in finding creative solutions. We do not have corporate rules or guidelines; this allows us to provide our clients with the excellent service that they deserve.

We offer you the fastest and easiest way to sell your property. We use private funds for all transactions, allowing us to close quickly, usually within three to five business days. We buy all types of properties including houses, condos, town homes, lots and commercial buildings.

Sometimes sellers just don’t want the hassle of listing with an agent, showing the property, waiting for a buyer, and then waiting for the buyer to get financed so they can get paid. We at Real Estate Solutions, LLC pride ourselves on being able to cut through the red tape of a traditional real estate transaction.

Whether you are simply looking for a quick and easy way to sell your property or are faced with a problem property, we can help. We can help even if your property has little or no equity, if you’re facing foreclosure, bankruptcy, divorce, job transfer, double payments, or bad tenants. Regardless of your situation, we have the ability and know-how to solve the problem.