Do you hesitate to file bankruptcy if you are facing foreclosure because you are concerned about your credit, even if you are in foreclosure? Are you more concerned about your credit or the stigma of filing bankruptcy than about saving your home? Don’t laugh; I actually had a case like that.
Marge (not her real name) filed chapter 13 bankruptcy with our office in an attempt to get a loan modification through our bankruptcy court’s loan modification program. However, Marge is not on the mortgage loan — only her husband is — and her husband refused to file bankruptcy. Marge could not apply for a loan modification for her husband’s loan, so we tried to get her added to that loan. However, we were not able to do so, and Marge could not apply for a loan modification. Because of this, Marge and her husband eventually lost their home to foreclosure.
There are two reasons that prioritizing your credit over fixing your financial problems is foolish. First, if you are behind on your bills, including mortgage and car payments, you already have bad credit. Some of my clients’ credit was so bad that when they filed bankruptcy their credit score went up! Second, if you are about to lose your home or car, or are in danger of having your wages garnished or the money in your bank account taken because of debts that you cannot pay, those things are far more important than your credit score.
If you are in foreclosure or have other serious debts that you cannot afford to pay, contact a bankruptcy lawyer today. Don’t let a bad financial situation ruin your life because you are concerned about your credit or about how it would look if you were to file bankruptcy.