Advice on Buying & Selling Real Estate in Arizona

If you have suffered the misfortune of a bankruptcy in the past few years, don’t lose heart – you are not at all alone. The last few years have seen record foreclosures, losses of equity and job losses – all of which create an environment condusive to increased bankruptices.

A January 2009 report from Arizona Capitol Times shows that bankruptcies in Arizona more than doubled in 2008, with Chapter 7 bankruptcy far outweighing Chapter 13 bankruptcy.  It seems that what has been a bleak time for those in the real estate profession has been a boom for bankruptcy lawyers.

Should you file for bankruptcy?
More often than not, when someone loses their home to foreclosure, they owe more money than the home is worth.  The bank then seeks to sell the property at auction and once it is sold, there is still money owed to the bank. Next, they will pursue the former homeowner (who is responsible for the mortgage) to collect the difference – which they most likely will not have.  This then puts the bank in a position of either wrting off the difference, or collecting the money. If they try to collect, the simplest way for the homeowner to stop the collection activities is by filing for bankruptcy.

There has been lots of reform over the past few years as bankruptcies have skyrocketed.  There are more cases of banks “forgiving” the outstanding balance which is a huge blessings to those that would otherwise have to suffer the credit impact of both a foreclosure and a bankruptcy (a major, double hit to a credit score).

Some may not be aware of the different kinds of bankruptcy options that exist.  For individuals, the most common forms of bankruptcy are Chapter 13, where you restructure your payments and agree to pay back your debts, or a Chapter 7 where all of your unsecure debts (except student loans) are eliminated. From a credit restoration standpoint, it doesn’t seem to make sense to file a Chapter 13, as it will have the same impact on your credit and just draw out the recovery time. 

The decision to file bankruptcy, even after foreclosure, should not be taken lightly. I recommend seeking advice from your trusted advisors which should include your accountant, financial planner, and a bankruptcy lawyer (not just a general practice lawyer).

The good news is that there is life after foreclosure and bankruptcy. Once these are behind you, every day is a step towards having a once-again strong credit rating. If you have had a bankruptcy, foreclosure, or both, here are a few options to help you in the recovery process.

1. Lexington Law – This is a nationwide credit repair law firm that makes credit repair affordable. You can do it on your own, but it will take far longer, and generally not have the same results (when lawyers write letters, companies have to pay attention). Visit the Lexington Law website for a free consultation.

2. The Bankruptcy Mortgage Book – This is not only a guide to getting a mortgage and becoming a homeowner after suffering the challenge of a bankruptcy or foreclosure, but it also provides some options for homeownership along the road to recovery. Visit: http://www.bankruptcymortgagebook.com/ to get your copy.

The most important thing to keep in mind if you had a foreclosure, bankruptcy, or both is that is isn’t the “balck cloud” that many feel it will be.  It’s not like people will be able to look at you and know your financial past. And remember, it’s your business and no one else’s, including your close friends and family.