The recent financial squeeze has left many Canadians struggling with mortgage and other payments, and it does not seem to be letting up. Millions face a difficult dilemma, should they file bankruptcy or opt for foreclosure?
In fact, neither option will be an easy one. Foreclosure and bankruptcy will stay on your credit report, though bankruptcy is likely to stay longer. At the same time, financial institutions do not look favorably on borrowers who have faced foreclosure.
Before you think of foreclosure, it is best to contact your financial institution. Being one or two months behind is the right time to talk to them. If you have received a formal notice of default from your lender, it may seem to you like you are in serious trouble. However, nothing is lost, and you have time before the formal process of foreclosure begins. One issue to consider is whether you are willing to give up your house or prefer to keep it. If you don't want to lose your house, do your best to make up for the missed payments. You can do this by spreading them out or you can pay as a lump sum, if possible. If this is not an option, you may talk to your lender and request that the loan is modified. For example, you can ask if they can lower your interest rate.
What if you choose to file for bankruptcy? This may be expensive. You can use the services of a bankruptcy lawyer who will charge a hefty fee. Or it may not be easy to find a good lawyer since some of them try to increase their profits by handling cases quickly. Your lawyer may not give proper attention to your bankruptcy case. Other costs associated with the bankruptcy process include government fees for filing, court fees, mailing costs, etc. Your trustee may ask that you cover these and other costs. You will also lose windfall you receive or are entitled to. These include money you get by luck, for instance, inheritance or lottery winnings. You will also lose a portion of your earnings or what is considered surplus income. Your trustee in bankruptcy will inform you how much you are required to pay. This is done based on your recent pay stubs.
In addition, not all debts are eliminated including taxes, alimony, and debts due to fraud or injury. This holds true for penalties and fines as well.
Bankrutpcy will remain on your record for several years, and your application for a credit card or loan may be denied. What about possible discrimination against you? Discrimination against persons who have filed bankruptcy is prohibited by law. You cannot be denied public housing, a driver's license, or job on grounds that you have declared bankruptcy.
In fact, neither option will be an easy one. Foreclosure and bankruptcy will stay on your credit report, though bankruptcy is likely to stay longer. At the same time, financial institutions do not look favorably on borrowers who have faced foreclosure.
Before you think of foreclosure, it is best to contact your financial institution. Being one or two months behind is the right time to talk to them. If you have received a formal notice of default from your lender, it may seem to you like you are in serious trouble. However, nothing is lost, and you have time before the formal process of foreclosure begins. One issue to consider is whether you are willing to give up your house or prefer to keep it. If you don't want to lose your house, do your best to make up for the missed payments. You can do this by spreading them out or you can pay as a lump sum, if possible. If this is not an option, you may talk to your lender and request that the loan is modified. For example, you can ask if they can lower your interest rate.
What if you choose to file for bankruptcy? This may be expensive. You can use the services of a bankruptcy lawyer who will charge a hefty fee. Or it may not be easy to find a good lawyer since some of them try to increase their profits by handling cases quickly. Your lawyer may not give proper attention to your bankruptcy case. Other costs associated with the bankruptcy process include government fees for filing, court fees, mailing costs, etc. Your trustee may ask that you cover these and other costs. You will also lose windfall you receive or are entitled to. These include money you get by luck, for instance, inheritance or lottery winnings. You will also lose a portion of your earnings or what is considered surplus income. Your trustee in bankruptcy will inform you how much you are required to pay. This is done based on your recent pay stubs.
In addition, not all debts are eliminated including taxes, alimony, and debts due to fraud or injury. This holds true for penalties and fines as well.
Bankrutpcy will remain on your record for several years, and your application for a credit card or loan may be denied. What about possible discrimination against you? Discrimination against persons who have filed bankruptcy is prohibited by law. You cannot be denied public housing, a driver's license, or job on grounds that you have declared bankruptcy.
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