Homeowners in Phoenix who are underwater on their homes might be interested in a few tips about whether foreclosure is a good option for them. The truth is that going through a foreclosure can have consequences for years, just as a personal bankruptcy does.
When prices of homes and incomes were rising, investing in a house seemed like a good idea. However, since the housing bubble collapsed, many homeowners are faced with having a home that is valued at less than they paid for it, and they owe more on the mortgage than the house is worth. In addition, many people have seen their income stagnate or drop in the past few years, which makes it more difficult for them to keep up with their mortgage payments.
Many people are in the same circumstance. That means there are more homes on the market than there are qualified buyers. Moreover, the homes are hard to sell if they are worth less than the mortgage balance. People who find themselves in this circumstance might consider foreclosure. However, it can harm a credit rating for a long time and make it hard to qualify for a loan. Another option is a short sale, which requires getting the mortgage holder to agree to take less for the house than is owed. It is important to keep in mind that either option can have federal tax implications.
Talking to a bankruptcy lawyer in Arizona may be a good first step for people who find themselves in this situation. A bankruptcy lawyer might be able to stop a foreclosure if someone was struggling to pay their bills and at risk of losing their home. A bankruptcy lawyer could also explain all the options that are available to a client to eliminate or manage their debt.
Source: Huffington Post, “Is Foreclosure Ever a Good Idea?”, October 25, 2013