While many are led to believe that filing for bankruptcy can kill your credit score, it turns out missing a single mortgage payment—a common symptom of recent economic malaise—may be just as deadly to your credit’s near future.
According to a recent article from The New York Times, “Missed mortgage payments, serious loan delinquencies, loan modifications, short sales, foreclosures and bankruptcies all drag down credit scores. Because a mortgage is such a big slice of anyone’s credit profile, it carries more weight than other loans. Both FICO and VantageScore have studied and quantified those impacts. They reached similar conclusions: for people with near-perfect records, a single mortgage payment that’s 30 days late reduces a credit score enough to hurt. For anyone, a short sale — selling a home for less than the amount owed — can be almost as destructive as a foreclosure. In contrast, a loan modification — when the lender approves new loan terms — can have a ‘very, very minimal’ effect, said Sarah Davies, the senior vice president for analytics at VantageScore. In some cases, the borrower’s score might drop 10 or 15 points. With a loan modification, said Joanne Gaskin, the director of global scoring solutions at FICO, “the consumer does not have to go delinquent to get assistance.”
But finding a lender that will actually provide a mortgage modification has been hard to come by in the wake of the recent real estate reckoning. Even the President’s Home Affordable Modification Program (or HAMP), intended to help homeowners by providing incentives for lenders who provide modifications, rejected more than twice as many homeowners as were granted permanent relief. HAMP was further criticized in the beginnings of 2011 following a sharp drop in the amount of loan modifications that were processed through the program at the end of 2010.
As The Times put it, “Modification horror stories abound; some borrowers have been told they can’t be helped unless they’ve already missed payments.”
Fortunately, escaping the “horror” of a market full of bad mortgages without hope for rising “above water” is precisely the scenario for which bankruptcy was created. If you’re having trouble making your mortgage, living in a home that is hopelessly undervalued, and/or residing in an area that is currently devalued and an eyesore for the foreseeable future, bankruptcy can help get you back on the right side of the proverbial mortgage tracks: allowing you to surrender your underwater home, negate your personal and financial liability, and move forward financially.
And if you’re going to ding your credit score similarly with a bankruptcy or a missed mortgaged payment, isn’t it better to also dispense with other debts bringing you down at the same time?
In short, don’t wait for your own personal housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep (or flee) their hard-hit homes. If you have been hit hard by the lingering housing crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy professionals at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now”