Debt Consolidation Loans Versus Bankruptcy


Bridge Mortgages provides financing countrywide with home equity loan solutions for debt consolidation that are better than consumer credit counseling and bankruptcy!

Secured Debt Consolidation Loans Offers More Opportunity than Bankruptcy or Consumer Counseling

With the new bankruptcy laws in effect, it's up to the court to determine whether your case qualifies for Chapter 7 (total liquidation) bankruptcy or if you must file under Chapter 13 (debt reorganization). You won't be allowed to file for Chapter 7 if your income is above your state's median and you can afford to pay 25 percent of your unsecured debt, said California-based bankruptcy attorney Stephen Elias, who is coauthor of the book "How to File for Chapter 7 Bankruptcy." But, he said, you may be allowed to file for Chapter 13.

If your income is below the state's median but you can pay 25 percent of your unsecured debt, you may be able to file Chapter 7, but the court can still require you to file Chapter 13 instead if it believes that you would be abusing the system by filing for Chapter 7, Elias said.

Under the new laws, you also must undergo consumer credit counseling in the six months prior to applying for bankruptcy, and, before your debts are discharged, you must attend money management classes at your expense. There are many other complicated requirements that have made filing for bankruptcy much harder and much less affordable for consumers in debt.

If the new bankruptcy laws aren't daunting enough, you also have to consider the lasting effects of bankruptcy. For one thing, getting a home equity loan after a bankruptcy or a bad credit mortgage refinance is not only much more challenging, but you'll also pay much higher interest rates than someone who hasn't filed for bankruptcy.

Some people think that getting a second mortgage after a Chapter 13 Bankruptcy isn't as bad as getting one after a Chapter 7 because it doesn't stay on your credit report for as long. It's true. A Chapter 13 will still be on your report for 7 years from the date paid, and a Chapter 7 stays on for 10 years from the date of filing. But, considering the fact that Chapter 13 will allow typically 3 to 5 years for the debtor to pay the debts, it actually could end up on your credit report longer than a Chapter 7. Besides, any mortgage loan you take out, whether after a Chapter 7 or Chapter 13, will still be a bad credit loan. So, it actually doesn't make any difference.

A 2nd mortgage after BK would cost you a lot more than getting a loan would now. And, debt consolidation loans can help you keep your house by paying your past debt due. So, off collections and judgments now by getting your loan before it's too late.

Stay up to date with current mortgage industry news: At Bridge Mortgages, we will help you utilize your home equity wisely. Our loan experts will find the right debt consolidation solution for saving you money!

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