Ever since the “official” start of the recession in December 2007, homeowner foreclosures and Chapter 11 bankruptcy filings have been skyrocketing across the United States and around the world – with no signs of slowing down. In fact, recent statistics released by the Council of Mortgage Lenders in the UK revealed that foreclosures could increase by up to 200 per day, which is certainly not a number to sneeze at. And as we’ve learned from the Great Recession, what happens in Europe tends to happen here – and high-income earners are often the first to be hit, thus resulting in increased Chapter 11 bankruptcy petitions.
With many experts claiming that the worse is yet to come in regards to the housing industry, many homeowners are left scratching their heads: why are homeowner repossessions drastically spiking, and can filing for a Chapter 11 bankruptcy help in the face of repossession?
Financial experts agree that the tremendous rise in homeowner repossessions is due in large part to the tightening hold of the credit crunch. As the risk of a double-dip recession looks like a certainty, many businesses are forced to cut staff in order to make ends meet – which means that many consumers have now found themselves out of a job. Additionally, many high-income earners who still have a job are finding their budgets tightening while their variable mortgage payments are rising – a classic scenario caused by the confident housing market of the 90s. These factors all contribute to the spike in homeowner repossessions and Chapter 11 bankruptcy petitions.
Yet if you’re being faced with a looming repossession, you don’t have to resign yourself to losing your home. In fact, many lenders are willing to work with their clients in order to help them keep their houses. For example, a popular move enacted by mortgage lenders includes giving a repayment vacation, where a consumer doesn’t have to pay for a month in order to get his or her finances back on track. Additionally, lenders can set up new payment plans that can go a long way towards making monthly payments more manageable. This is often one of the main benefits of filing for Chapter 11 bankruptcy, as you’re given a payment plan that allows your creditors to collect on what they’re owed. After all, lenders certainly don’t want to lose their money by repossessing your home.
If you’re faced with repossession , make sure you exhaust every outlet. Lenders and banks are typically lenient when it comes to what they’re willing to do to make sure that you keep your home. If you still have trouble making payments after negotiating with your lender, turn to bankruptcy courts by filing for a Chapter 11 bankruptcy. It may just be the last move you have left to save your finances – including that of your home.