If you are facing a hard time in repaying your mortgage loan and as a result it is badly affecting your credit score, you can opt for loan modification and save your home from foreclosure.
What is loan modification?
If you cannot afford to make monthly payments toward your mortgage, you need to negotiate with your creditors to make some changes into your existing mortgage terms and conditions, by loan modification, so that you can repay the loan, according to your affordability. Your lender may lower your interest rate, decrease your outstanding loan amount, or may even waive off penalties towards late payments. You can negotiate with your creditors on your own or can take help of some third-party professionals.
What are the eligibility criteria?
To get approved for a loan modification, you need to fulfill some eligibility criteria mentioned below:
What documents are needed for loan modification?
Along with your application, you need to furnish the following documents:
What are the pros and cons of loan modification?
The pros of loan modification are:
The cons of loan modification are:
You need to keep in mind that if you opt for a modification program exceeding your affordability, it will ultimately lead to foreclosure. If you take help of a third-party professional, you also need to be aware of scam companies and choose a reliable and authentic one, which will help you to get the best deal.
Divorce, coupled with bankruptcy can pose serious problems for those involved. When a married couple who no longer wishes to remain together have debts piling up and are heading for divorce, bankruptcy might be one way to sort out the financial issues. Bankruptcy has the capacity to be filed by just one spouse, or jointly. The effects of bankruptcy on divorce proceedings? Abrupt at best. An automatic stay will put an end to all activities on divorce proceedings.
Although one lawyer may seem trying in a time of stress, two lawyers may be necessary to sort the matters out, a bankruptcy attorney and a divorce lawyer to hash things out between the unhappy couple. Some good advice to take would be to immediately seek out a bankruptcy lawyer to guide you through your finance, in addition to the attorney who is assisting you through your divorce. The expert guidance with alimony, child support, property settlements, and other financial issues is key when you are suffering from the stress of bankruptcy and divorce simultaneously.
If the couple shares a large amount of debt, filing for bankruptcy jointly is a good option. This can even simplify the divorce settlement, and filing bankruptcy jointly is more cost efficient. If you are a spiteful ex, filing individually for bankruptcy is a good way to send the creditors after your spouse.
Then there is the issue of property that you have accrued during marriage. That’s marital or community property. If you are filing jointly for bankruptcy, and your former spouse has marked some of your separate property as marital property, you should take these actions. First, you should prove what is yours is not community property. The bankruptcy court will release the exempt property, and the remaining property that you share will be part of the bankruptcy estate and therefore will be utilized for paying off debts.
After the bankruptcy court has figured out which property is exempt from bankruptcy, the divorce court can split the property between the spouses equally. The non exempt property will be sold by bankruptcy trustees (representatives) to pay off debts.
A different way to steer clear of financial loss on account of your former spouse’s debt is to attach a property of your spouse as a security lien. This lean will permit you to take hold of the property and utilize it to pay off your spouse’s loan if he or she is thinking of ditching and letting you pay. The property with a lien may get you less than the market price, but this is still a good way to protect yourself.
Finally, you can work an indemnity clause into your divorce decree. This will help guard you from creditors who are coming after you to pay for your ex spouse’s debts after the divorce. If your husband or wife files for bankruptcy, don’t worry. The judge will enforce it to protect you.
The following are some tips to help you improve your credit situation.
STUDENT LOANS. As most former college grads struggle with exorbitant student loan payments, it is possible to reduce your monthly bill and with time, have the federal Income Based Repayment Program extend you their forgiveness on your debt.
But don’t get too excited yet. The all powerful credit scores do not just reflect our ability to pay bills on time, they dictate how we will go about our lives. If there is an unscrupulous mark on our credit reports, like a thirty day late payment, all of the years you spent paying your bills on time can fly out the window.
Credit scores have been the star of the show during the recession, as consumers and debtors attempt to pay up their mortgage payments and revolve debt. Many people- even those who have had long time high credit ratings, have grumbled that their scores have plummeted as credit card companies cut limits and close inactive cards.
Regardless of these facts, experts allege that consumers should not focus on their scores, they should hone in on the information that is contained in the report. According to one analyst, “the score is merely a reflection of what is in the report.”
Of all of the information contained in your credit report is the history of your bills. Have they been paid? Everyone tells you this, but it is worth reiterating. Pay your bills on time every month! Did you know that thirty five percent of your FICO credit score is tied to that payment history?
An additional thirty percent of your score is founded on your outstanding debt. Obviously, lenders have an expectation of you to use your credit cards, but they clearly want you to do so with caution. If you have three credit cards with a sum amount of $30,000 in available credit, they will examine how much of that money you are utilizing. Unoriginally, this is called your utilization rate. Don’t max those cards out! In fact, don’t even think about coming close to it!
It’s pretty simple to determine your utilization rate. Just add up all of your outstanding balances and divide that by your total credit limit. This should produce a number less than one. If it hits one, you are maxed out and out of luck.
Ready for some secret insider information? Most credit analysts (credit bureaus included) will suggest that you keep your credit utilization under thirty percent of the total limit. But here’s a trick. Be sure that you do this for each card. If you go over that threshold on one card, let’s just say for argument’s sake you max out one card, use only ten percent on another card and nothing on a third card, you are safely under thirty percent of the total limit, but you will still be slammed for utilizing so much of the limit on the first card.
How much of your limit you use any month can also turn things around on your card. If you max out a card every month but pay it in full, it is still possible that you will be hit for reaching your limit. Credit card companies do not report if you have paid off your card, only how much you have spent.
Additionally, about fifteen percent of your score is based on your credit history, which doesn’t work out well for college grads just hopping on for the ride. But, if you’ve been managing your credit well for a couple of decades, your numbers are likely to be pretty cushy.
But don’t forget this key information. The higher you climb, the faster and further you will fall. If you have been doing an immaculate job of looking over your credit for two or three decades and one month you miss a payment, you automatically will get put into a much riskier credit category than your friend who pays a little late on her monthly payments.