Option #8: File Chapter 7 Bankruptcy

Chapter seven Bankruptcy is the harder one of the two types that homeowners are eligible for, it is the one that does ‘wipe-out’ any and all unsecured debts, but most people won’t attempt it because it is severely limiting to their lifestyle. 
 You’ll basically need a foreclosure Attorney to put a ‘stay’ on all of your possessions and then the state will get to decide which of your possessions will be sold off to cover these debts. Your debts will also be increased by some stiff legal fees, too.

Your home’s foreclosure is stopped temporarily during the bankruptcy period, while the state’s proceedings against you carry on, but they don’t actually pay your debts with the sold property, they just take most of the money gathered from selling off your things into the state treasury and declare the debts against you nullified. –But not your mortgage! Your mortgage will be ‘un-paused’ as soon as the proceedings are over, and your foreclosure process will start up again right where it left off! 

Pros:

If you just need some time to make the cash yourself, then the paused period may be enough time to generate enough money to make up the difference… But then again you’ll be losing a lot of your stuff in the meantime! Also, if you have lots of other debt such as your credit cards, it can be helpful to get rid of that as well. 

Cons:

It’s a horrible feeling knowing that you won’t be allowed to sell so much as a plastic spoon without going to jail… All your assets are frozen and become state property. It also isn’t very helpful to combat foreclosures at all. 

Let’s not forget that this will muck up your credit report for the next 5-7 years, too, on top of the damage the Notice of Default you already got does. It’s the 2nd worst thing that creditors can see on your report, which will still drive up your borrowing rates in the future much higher than anyone should ever have to pay.

Oh yeah, it adds Attorney fees too, so the whole process truly hurts you more than it can help you in every way.

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