Bankruptcy Alternatives Blog

Will an Economic Slow-Down Force Consumers to Re-Think Their Bankruptcy Alternatives?

In our previous blog post about using a mortgage as a bankruptcy alternative, we discussed using a mortgage to repay high interest credit card an other debt. This strategy has become popular over the past few years as interest rates have decreased, and house prices have increased.

However, a recent report by the Mortgage Bankers Association rindicates that the number of loan applications for mortgages fell by 1.2% to the lowest level since May 2002.

This means that the popular bankruptcy alternative of re-financing your house to repay your other debts may be becoming less popular as interest rates rise and house prices level off and even fall in some parts of the country.

Home owners should no assume that house prices will rise indefinitely. What goes up must come down, and as house prices fall, the ability to re-finance may also decrease.

If you have equity in your house, now may be the time to attempt to get a debt consolidation loan before the debt consolidation option becomes more difficult. Of course now is also a good time to work on reducing your debt levels, so that you can avoid personal bankruptcy. You have bankruptcy alternatives, but they depend on you taking action while you still have options.

Tagged as debt consolidation, personal bankruptcy, bankruptcy, Chapter 7 bankruptcy