Pennsylvania borrowers who take out lines of credit on their home may not fully understand the implications of these loans. For those who choose to pursue this line of lending, it is important to remember that creditors can foreclose upon your home because of a default on a home equity loan. Even if the home's original mortgage was paid off long ago, those creditors can still seek foreclosure if the home equity loans are not consistently paid. If you are struggling to keep up with home equity loan payments, you may be considering filing for Chapter 7 bankruptcy. Today, we will discuss whether bankruptcy of this type is likely to help you recover from the financial strain of an unpaid equity loan.
First, it is important to remember that not everyone will qualify for Chapter 7 liquidation bankruptcy if they fall behind on their mortgage payments. Instead, Chapter 13 bankruptcy, which requires periodic repayments and payment restructuring, might make more sense. This is a determination that must be made by the qualified bankruptcy attorney and the borrowers who are seeking financial help.
In cases of overwhelming home equity debt, homeowners may need to resign themselves to the fact that they will not be able to keep their home. Again, this is an individual decision, but mortgage payments can quickly become too burdensome to handle, especially if multiple equity loans have been taken out. Loan modifications through the lender and refinancing options may also be available for those who want to keep their homes. Ultimately, the best answer to such a financial dilemma might be as simple as selling the home; depending on the amount of equity in the property, homeowners might be able to make a tidy profit.
The decision to declare bankruptcy because of overwhelming home equity loans should be based upon analysis of a wide range of factors. A qualified bankruptcy attorney can help clients learn whether Chapter 7 bankruptcy will help them get the financial start they need to put these delinquent home equity loans in the past. Further, those professionals can help clients determine whether keeping their home is truly the best financial move.
www.foxbusiness.com, "Can't pay off home equity loan - file bankruptcy?" Justin Harelik, Nov. 20, 2013