Loan Modification to avoid Bankruptcy

by admin on February 17, 2009

Protection against bankruptcy is covered in 2 chapters, chapter 7 and 13.

Each chapter has its own advantages and disadvantages. Once you have no other go, then this is the last resort to depend on. This is the final step initiated by anyone who has nothing to fall back on. A Bankruptcy lawyer would help you to wade through these tough times.

The reason for your bankruptcy could be due to 2 reasons, high loan amounts to be disbursed or foreclosure. The reasons for people to land in bankruptcy could be the inability to repay their payments like medical bills, loan taken for personal use etc. you can still hire the services of a debt settlement company for settling your debts so as to avoid bankruptcy.

Let us now understand the term Debt settlement in detail.

The best problem for an individual in debts to come out of this problem of bankruptcy is to approach a debt settlement company. These companies hire professionals and legal experts who would give valuable advice to the customers who approach them. These companies enable the people to settle their dues without opting for this last resort i.e. bankruptcy. The job of the debt settlement companies is to talk terms and talk out the entire issue with your creditors. They also negotiate on various issues like the rates so as to lessen your burden. They would settle the matter with the creditors and enable you to be in a better position for repaying these debts by buying time from these creditors. Your lender, if satisfied would then issue you a letter stating “you have settled your debts lesser than the actual amount”

Creditors also understand your problem. They also would not want to enter into the last resort of bankruptcy, since they would also not stand to benefit from this. If convinced, they would also give you some extra grace time for enabling you to disburse your loan amount. They also know that you are going through a financial strain.

Foreclosure:

Some debtors who are facing foreclosure take refuge under the term Bankruptcy. I personally feel this is not the right thing to go in for. Given a choice, I would not choose this alternative or go in for this option. Many house owners personally feel that an alteration in the terms and conditions of their loan can be effected by an authorized loan modification lawyer. Sometimes you are in doldrums, and the only person who could save you from this problem is the loan modification attorney. You can save from becoming homeless.

What exactly is loan modification?

If you are not able to pay off the loan amount due to your lender or creditor, then one needs to make a loan modification. Loan modification can be classified into 2 types.

  1. Either there could be reduction in the total amount which you owe your creditor,
  2. Reduction of interest rate or extension of time period to disburse the loan amount could be another factor.

You could opt for an absolutely new loan or a combo the above 2 choices.

A lender would be more than willing to make alterations in the loan structure rather than take a huge loss against a foreclosure.

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