Surprising Benefits of Foreclosure

When we think of foreclosures, we typically think of a financial nightmare. Families begin falling behind on their mortgage payments and risk losing their homes. However, there are some surprising benefits of foreclosures for both the struggling family and the uninvolved bystander. While foreclosures are undesirable, sometimes the financial predicament becomes unavoidable and tough decisions have to be made.

Fortunately, a foreclosure can ease the pain of heavy mortgage payments in the months until the situation is resolved. Also, until the foreclosure is finalized, homeowners can continue living in their home without worrying about liquidators roaming through their house. Despite these silver linings, however, foreclosures are still a devastating blow, but they needn't be, especially as they can provide a fresh financial start. Consider the following benefits as opportunities for growth.

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How Bankruptcy Can Help

The first benefit to foreclosure is that it isn't a dead end. In other words, homeowners struggling with their mortgage have various options available to them to avoid losing their home. These options include meeting with a bankruptcy attorney to avoid foreclosure. A bankruptcy attorney will help you consider:

Whether to pursue bankruptcy or a foreclosure. Generally, if you fall behind on your payments but have the ability to pay them, bankruptcy is a good option. However, if money - not time - is the biggest problem, bankruptcy won't save your foreclosure woes.
The choice between Chapter 7 and Chapter 13. Chapter 7 allows you to stall payments, but can potentially result in the liquidation of your assets. Chapter 13, on the other hand, is more likely to help you keep your home.

Benefits of Foreclosures for Bystanders

While some people suffer from foreclosures, others benefit from the cheaper houses. Foreclosed homes become a cheap investment opportunity. In fact, it's possibly to purchase a property for less than 10% of what it was sold for. Since the bank is trying to get the home off its books, however, they won't do any of the repairs for you. Purchasing the foreclosed home at such a cheap price means that you purchase the problems that come with it.

Foreclosure Benefits for the Homeowner

Ironically, facing foreclosure may be the opportunity to reset your financial life. For instance, many families that realize they can no longer meet their mortgage payments simply stop attempting to pay and instead start saving the money. In these extreme circumstances, they're so far behind and so deep in debt that their payments won't help. Thus, they begin saving the money for their fresh start.

Homeowners also have the opportunity to negotiate the terms of their loan. A good bankruptcy attorney can provide you with tips to help you succeed in negotiating with your lenders. Even if the negotiations don't work out, you also benefit from the experience by learning from your financial mistakes and decisions. While a foreclosure may not be a pleasant experience, it's still a free lesson in money management, and you will be more likely to avoid similar pitfalls in the future.

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