Home loan
Using A Home Equity Loan To Get Out Of Bankruptcies
When looking at alternatives when one is faced with bankruptcy, You’ll come to see that, there are a variety of options available for you. Sometimes, bankruptcies are unavoidable, these days, especially with the recessions and economic downturns. However, things can be resolved quickly and efficiently once you have filed for bankruptcy.
Bankruptcy protection such as Chapter 13 bankruptcy is quite flexible, since it allows you to pay your outstanding debt over a period of three to five years depending on your case. In addition, on the plus side, if you have an equity on your home? Then the debt repayment process can be accelerated and fast tracked. Pay-off balance must be required for one to fully pay-off the outstanding debt amount. In such case, a home equity loan or perhaps refinancing your per-existing loan might be a better way to pay off your debt in a chapter 13 bankruptcy.
A home equity loan is a loan in which the person borrowing uses the equity on their home as collateral. This type of loan is very useful to help finance debts such as a chapter 13 bankruptcy. Home equity loans are protected loans. “The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower.” bankruptcy is an unsecured liability in which there has been no asset being pledged as collateral against the loan. Using a home equity loan to pay off bankruptcy for all intents and purposes converts an unsecured debt to a secured debt.
Getting a new loan can come with the benefit of a longer debt repayment plan, in simple terms, you’ll be allowed more time to pay off your outstanding debt. Therefore, you are not limited to a time period of 3 to 5 years that comes with chapter 13 bankruptcy. You’re more likely to get a lower interest rate when you refinance a home equity loan.
Get in touch with your attorney and check to see what option might be available for you? Check to see if you can work out your remaining balance from you bankruptcy case. You may be able to file a motion in regards to incur debt, which may make it easier to get a new loan. However, all cases are different so each case is handled a little differently.