For some of us, bankruptcy looks like the only option to get out of debt in anything resembling a reasonable length of time. But deciding to declare bankruptcy is not simple. Repairing credit ratings after bankruptcy is also not easy. Difficult, but not impossible. Even a person who is in the middle to declaring bankruptcy can still qualify for an equity home loan. But you need to have some information about bankruptcy equity home loans before you try to get one.
You can discharge your chapter 13 bankruptcy ahead of schedule by getting a bankruptcy equity home loan. When declaring a chapter 13, you are allotted between 36 and 60 months to satisfy all debts. On special occasions, the debtor’s lawyer can submit a formal request to create an additional debt with the intention of eliminating the original debts more quickly and with a smaller amount of interest.
Once approved, the attorney can then negotiate with banks to find a home equity loan that has terms the person can pay off on time and will provide enough money to discharge a good share of the unsecured debts against this person.
If one already has a home equity loan outstanding when filing bankruptcy, it is important to note that this is a secured form of credit. With it being secured, the only way to get rid of the debt using any form of bankruptcy is to let the lender have your property and leave your home.
This is also true for any home equity line of credit that is established while declaring bankruptcy. The only way to discharge this debt is to pay it back according to the terms agreed to when signing the loan papers or to surrender the property.
This is a fact that can come in very handy for a homeowner who is filing bankruptcy. Banks are more willing to consider making a loan to someone with sufficient security to cover the amount of the loan and sufficient reason to ensure that it gets paid back on time.
A bankruptcy equity home loan can also provide the basis on which to begin rebuilding good credit when one emerges from bankruptcy. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.
While you are in bankruptcy, it can be very difficult to get any type of line of credit, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It can help to pay off creditors much more quickly than would otherwise be possible. A person may even be able to get smaller payments and get more than the allowed three to five years to make a full repayment. Debtors need to keep in mind that no matter what, the bankruptcy equity home loan must be repaid as it is secured by a house that can be foreclosed upon if the the payments are not made.
