Using Home Equity to Get Out of Bankruptcy
Once you take your time and look around for the alternatives that you have when you are faced with bankruptcy, you will find that there are a number of things you can do to make your situation better. Sometimes people cannot avoid filing for bankruptcy, but there it is possible to fix things up quicker once you have filed for bankruptcy.
The Chapter 13 Bankruptcy gives you the option of repaying the outstanding amount of your debt over a period of about three to five years. The good news here is that if you have equity on your house, then it is possible to use that equity in order to pay off your Chapter 13 bankruptcy at a much faster pace. A “pay-off” balance is required by Chapter 13 Bankruptcy in order to effectively repay a part of or the full amount of the debt. In such a scenario, a home equity loan or even refinancing your existing loan might be a good way to pay off the outstanding debt in a Chapter 13 Bankruptcy.
The benefit of taking up a new loan is that it will give you a longer period over which to pay off the debt. This means that you are not limited to the three to five years that the Chapter 13 Bankruptcy allows you. Additionally, most probably you will also be able to find a lower interest rate by refinancing your loan or getting a home equity loan.
When you talk to your attorney ask him or her to work out the remaining balance of your bankruptcy case and to file a motion in order to Incur Debt for you so that you are able to get the new loan. You should also consult your loan consultant in order to figure out what kinds of options are applicable for you in the loan program for your specific situation.
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