Insolvency experts have warned that the number of consumers declaring bankruptcy will hit new highs in 2008.  In many of these scenarios, people are trying to shift their debts form credit cards on to their mortgages to avoid bankruptcy.  The chaos in the Australian share market has made it increasingly difficult for individuals seeking options as banks are now more reluctant to allow people to refinance their homes. Therefore thesedays the chances of borrowers borrowing their way out of financial disaster is bleak and the debt experts have warned that the situation is bound to get worse. According to Pat Boyden, a partner at Pricewaterhouse Coopers, the pressure is increasingly on rising interest rates and a slowing housing market.  

Help for people facing bankruptcy

Each state has a different bankruptcy laws. There are companies that deal with people facing bankruptcy and foreclosure which are becoming more and more familiar.  They can negotiate with your lender to pay off your loan, get out of the loan and prevent bankruptcy.  They can also find alternatives including consumer credit counselling for filing for protection.   They can negotiate with lenders to reduce pay off amounts, late fees, penalties and solicitors fees even if there is minimal or no equity in the house.  A we buy houses service provider may be able to work out a modification agreement, forbearance or short sale with your Mortgage Company or bank.

Keeping your house through bankruptcy

There are different situations that force a person to file for bankruptcy. Depending upon the circumstances there are different solutions available for individuals facing bankruptcy.  If this is the case, you can pay off all your debts but lose your assets and you can continue with mortgage payment after reaffirming with them if allowed by the local law in your state.  If you have some equity in your house and your payments are due, then it may be helpful to pay off the outstanding mortgage payments over a period of time. The official receiver or the trustee can sell your home to help pay off bankruptcy debts if that is the only way to release money for paying your lenders.  This is done in the case of freehold or leasehold houses and for homes owned solely or jointly. To avoid selling your house, your spouse, partner or friend can buy your beneficial interest in the house and stop the trustee from selling the house.  

Alternatives for Bankruptcy

When your credit is not in a bad condition, you may consider a change of lifestyle to fit your income. You may pull out the equity in the house, selling artifacts, cashing out retirement benefits or applying for a non secured loan.  If the credit is already heavily damaged, you can take advantage of the Consumer Credit Counselling Services to pay off debts without filing for bankruptcy. If you are very deep in debt and can never repay it, the solution may only be bankruptcy. It will show on your credit report for many years and future financing may be really tough.