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Bankruptcy or Debt Settlement: Which Is the Right Option?

The problem with debt is that it can get out of control quite quickly. The good news is that, even when the mountain becomes too high to climb, there are solutions to the problem. Selecting one of a number of constructive repayment programs is the best way to clear the debt, with bankruptcy or debt settlement the chief choice to make.The purpose of both of these methods of debt repayment are the same; to lift the weight of debt without having to pay it in full. However, their respective terms and consequences are quite different. For example, filing for bankruptcy is a complex matter today, while settlement offers no guarantees.But with as much as 75% of debt cleared through debt settlement programs, and as much as 100% cleared through bankruptcy, they both provide a viable way out for those of us in real financial trouble.Advantages of SettlementThe main issue when choosing whether bankruptcy or debt settlement is the right course of action is the amount of debt that needs to be repaid. Agreeing a settlement means negotiations between a debtor and a creditor ends with a percentage of the debt to be paid in return for wiping the slate clean.Normally, a professional debt settlement company is hired to carry out negotiations. This is a good idea, since creditors can be very stubborn in seeking the highest percentage possible. However, a good deal can see the debt slashed to 40% if its actual value. This is often more than filing for bankruptcy achieves, but that too is dependent on other factors.A repayment schedule of 3 to 4 years is normally agreed, which must be strictly adhered too. And remember that debt settlement programs are not done in a court, so a creditor can walk out and begin legal proceedings any time they want.Bankruptcy: Which Chapter to Choose?There is no doubt that bankruptcy is a highly effective way to alleviate the debt burden, but it is not so clear cut as having debts wiped out by a court. This is an important factor to consider when deciding whether bankruptcy or debt settlement is the best course of action.Unlike in the past, when filing for bankruptcy effectively meant paying 0% of the debt incurred, there are different facets to the matter today, with cases filed under certain chapters of the Code of Bankruptcy. There are 4 in total: chapters 7, 11, 12, and 13, with the extent of the financial situation dictating which is the most appropriate.Business owners whose finances and assets are practically nil, can filed under Chapter 7, but Chapter 13 covers individuals unable to pay their debts. Both chapters 11 and 12 relate to reorganizing debt, ensuring that some (if not all) the debt is repaid, much like debt settlement programs.The True CostsAnd what of the true costs of the respective options? What are the consequences? Well, whether debts are cleared through bankruptcy or debt settlement, there are certain fees to be paid. However, the real consequence is the effect either can have on your credit report.Typically, filing for bankruptcy will incur fees of anything between $1,500 and $3,000, whereas a settlement agreement usually means fees of up to $5,000. This can draw many to the bankruptcy courts, but if a Chapter 13 ruling is made, then it could take 10 years for the ruling to be removed from the report.In contrast, despite its extra cost, debt settlement programs can remain on your record for just 2 years, ensuring an improved credit status can return much more quickly.

Home Purchase Loans With Bad Credit: Not Guaranteed But Within Reach

When it comes to securing home purchase loans with bad credit, whether through a traditional lender or an alternative lender, the approval process can differ by quite a margin. Approval chances can also vary, as can the terms and the generally affordability of the financing deal. But what both have in common is a chance of securing approval.A mortgage is probably the largest debt anyone will taken on in their lives, so it is to be expected that there be difficulties in nailing down the best deal. The promise of guaranteed mortgage approval is sometimes offered, but it would be foolish to believe in it. What does exist is a way to improve the chances of approval.A home purchase loan is available even to those borrowers with low credit ratings. And while compromises need to be accepted, the borrower can at least feel confident that a mortgage package is out there that best suits their particular needs.Do Guaranteed Loans Exist?It is a little misleading when lenders advertise guaranteed approval for a loan of any description. All loans have criteria that must be met before the application itself can even be considered – such as age requirements and citizenship. When it comes to securing home purchase loans with bad credit, loans that are extremely large, guaranteed mortgage approval cannot be promised.What can be guaranteed, however, are matters like no credit checks, where the lender ignores the credit score of the applicant. In such cases, set interest rates are charged regardless of how good or bad the score is, and these are usually higher than normal to cover the risks of such a policy.Of course, home purchase loans can be as large as $200,000, depending on the value of the home being purchased, and so the interest can be very high. But there are some ways to increase the chances of approval, thus making it practically guaranteed.Steps to Improving Approval ChancesSo how can the chances of approval be improved? Well, the success in securing a home purchase loan with bad credit rests on the ability of the applicant to prove they can afford the repayments. This chiefly comes down to the debt-to-income ratio.The ratio is calculated by adding all existing outgoings per month and measuring the figure against the total income. The ratio stipulates that no more than 40% of the excess income be used to make payments. So, if excess income is $1,000 per month, the closest an applicant can come to guaranteed mortgage approval is to secure a mortgage requiring only $400 per month.Drastically lowering existing debts will improve the situation, ensuring a greater excess income. A consolidation loan can do the trick, clearing the debts in one go and replacing them with a loan requiring lower monthly repayments. This must be done several months before seeking the home purchase loan.Maintaining AffordabilityOf course, what may be affordable now may not be so 5 or 6 years from now. What recent times have proven is that a sudden economic crisis can change our financial status very quickly, so having contingency plans in mind when seeking a home purchase loan with bad credit is a good idea.Thankfully, it is always possible to refinance a mortgage deal after a number of years, often using home equity to leverage extra financing. And when repayments are made regularly, the overall credit status improves too. It makes approval (though still not guaranteed mortgage approval) much more likely when applying for future loans.Negotiating a new home purchase loan will save money every month, ensuring your home repayments are always affordable. And that protects against the risk of defaulting and losing your home.

Home Loans With Bad Credit: Alternative Options For Better Approval Chances

Getting the funds needed to buy a home is not easy for those of use with bad credit histories. Traditional mortgage providers either avoid the risk, or charge high interest rates in compensation for accepting it, making such deals very expensive. But there are other options to consider when seeking a home loan with bad credit. The decision to buy a home is a major one, not just because of the amount of money involved but because it requires a lifetime commitment to repay the debt. Carefully considering the options, and the ramifications of each, is essential. Securing mortgage approval with poor terms can prove a very costly investment.But what are the alternative home loan options available to bad credit borrowers? Well, for those of us in very poor financial situations, the best two options are securing federal funded mortgages or privately funded mortgages.Federal Funded MortgagesPerhaps the biggest help to bad credit borrowers in their search for home purchase funding has been the Federal Housing Administration (FHA). Set up over 80 years ago, its purpose has been to ensure applicants for home loans with bad credit still have a chance to secure approval.The mortgages available through the FHA program are structured to allow for a greater range of incomes, and are very useful to first-time home buyers. Securing mortgage approval is made easier because, on the back of FHA subsidization, mortgage providers ignore the credit history of the applicant.This effectively means that income is the sole basis of approval, so all an applicant needs to do is prove that the home loan is affordable. Qualifying for FHA subsidizing is based on their assessment of credit status, income and circumstance.Private Lender MortgagesThe alternative to an FHA mortgage is a private lender mortgage, which is provided by individuals willing to effectively bankroll the purchase of an FHA property. Securing a home loan with bad credit is simplified because it is easier to strike a deal with an individual than with a financial institution with a strict lending policy.These lenders are generally to be found online, and they are willing to work on agreeing a deal around your own circumstances. Perhaps the mortgage term will be longer, or a mixture of repayment schedules and terms can be agreed. This greater flexibility makes securing mortgage approval much more likely.Of course, if negotiating a home loan with a private lender, it is essential that their reputations are checked out. Never try to deal with an unknown lender online, as the pitfalls can be too severe. So, check out either the Better Business Bureau or Verify1st websites to make sure they are trustworthy.Other OptionsOf course, there are other options to securing a home loan with bad credit than the two mentioned above. The most plausible source is an independent mortgage broker. These are not mortgage providers, but have a network of contacts that they use to find the best mortgage option on your behalf.The major plus of this option is that mortgage providers are contacted, and those interested in lending the funds will make an offer. So, effectively securing mortgage approval is guaranteed. But, the terms offered are usually quite poor with high interest rates.This is why it should be the last port of call for anyone seeking a home loan. A good broker will be able to find at least competitive terms, but it is fact that approval is so certain that is the major attraction.

Low Refinance Mortgage Rates Are The Secret To Improved Finances

It would be nice to think that mortgages will always be as affordable as the day they were first secured. But situations can change over time, and a good mortgage deal 5 years ago may now be too much to manage. Refinancing a mortgage is common course of action in this circumstance, but refinance mortgage rates are the key consideration.It is always preferable to secure low interest refinancing loans, but often the need to simply take control of such a large debt can be overwhelming, causing borrowers to take the first decent looking scheme that becomes available. But this is not a wise decision, since it is the interest rate that makes all the difference.Choosing the right mortgage refinancing scheme comes down to more than just buying out the existing mortgage quickly. The small details of any financial deal can have a profound effect on the worth of the exercise, so being selective is important.How Mortgage Refinancing WorksThe first step to finding the right refinancing deal is to understand how exactly the scheme works, and how it benefits a borrower. Once the mechanics of the scheme is understood, then securing the lowest refinance mortgage rates possible becomes the priority.A refinancing deal involves buying out the balance of an existing loan with another loan, though one with better terms. The repayments on the new loan should be lower than those on the original, and key to that is a lower interest rate. These low interest refinancing loans can make a huge difference, and alleviate the financial pressure.A mortgage refinancing scheme also provides a chance to cash in on the equity existing on a home. Equity is the share of the property value that is not covered by the mortgage, so can be turned into cash. A refinancing loan can be greater than the mortgage balance to buy a share of the equity too. Low interest rates are especially needed in this case.Financial Advantages to RefinancingAs mentioned, a refinancing scheme can see a mortgage restructured to provide great savings, and with the benefit of low refinance mortgage rates, the savings can be significant. An example of the benefit can make this clearer.If the balance of an existing 30-year $200,000 mortgage is $135,000, the existing equity is $65,000. Monthly repayments on the loan are around $600, but this is proving a stretch after a recent job change, and a cash injection of $40,000 is needed. So, a refinancing loan of $175,000 is secured to clear the mortgage balance and get the extra $40,000.Securing a low interest refinancing loan is possible if the right criteria are met. But given that security is provided on the cash loan, through home equity, it is possible to get lower interest rates than normal. If the term of the new loan is 30 years, then repayments could be around $485, meaning the mortgage refinancing scheme saves around $115 monthly.Where To GoThere are great advantages with going to a mortgage broker when looking for a refinancing loan deal that can boast low refinance mortgage rates. The reason is that your mortgage broker is employed to find the best deals, and through a network of contacts, that can be done.When seeking low interest refinancing loans, keep in mind the best deals are generally found online. Online lenders have lower overheads and so can afford to lower their rates, but it is principally the fact they are experts in lending to bad credit borrowers that dictates their highly affordable rates.However, always take care when considering loans, mortgages and even mortgage refinancing schemes over the Internet, and check out the lenders on the BBB website before committing to anything.