Quote:
Originally Posted by strandinthewind
That has nothing to do with their qualification for a mortgage. You implied it was all the evil mtg companies fault. I responded to that. In the instant example, I know lots of people who chose the lower mtg rate and pay extra on that as a way to avoid paying more interest and as a safe haven in case something goes wrong and they could not make the higher fixed rate payment. On edit - but even if they blow the money, it would still take seven or so years for the ARM payment to reach the fixed rate payment.
As for bankruptcy, they can still file it. If they make more than $35,000 or so a year, they ordinarily cannot 100% discharge their unsecured debt in a 7 and will be put into a five year 13 plan, in which they will pay pennies on the dollar in their unsecured debt. Under either scenario, they ordinarily can keep their house (and their car for that matter) if they can show they can pay for it. If they give their house back in a 7 or a 13, FHA will allow them to buy another in about a year if they have income and have been the remaining debt (car, rent, etc. ) on time. So, bankruptcy is a viable option to this day. The govt. just made the 100% discharge in Ch. 7 less available to those making more money.
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oh BOY are you wrong about THAT one (the ch 11 or 13 "pennies on the dollar" spiel)
my best bud did a ch 13, paid 80% of his debt, the trustee made about 50k off of him, and at the end, his credit score is the same as if he had discharged the whole thing. People dont realize that for the most part, they wont qualify for a ch7, and yet, even if they pay their debt, creditors look at you like you DID file ch7. Plus, anyone can come in any time until your debt is discharged and put a lien on your assets. It totally sucks now how the system is set up. I highly recommend people find any other way out of a financial mess than bankruptcy. The chances of people qualifying for a ch7 are pretty slim unless you make squat in the job dept.