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Your Legal Helpers Detroit bankruptcy attorney can help you build a brighter future
Your Legal Helpers Detroit bankruptcy attorney works for your new lease on life. Through years of practice, your Detroit bankruptcy attorney understands that people file because they have faced unforeseen financial problems. No one plans on needing a Detroit bankruptcy attorney but when you need one you'll be glad you called on Legal Helpers.
Find out if you should contact a bankruptcy lawyer with this FREE evaluation!
Your Detroit bankruptcy attorney can give you all your options. He or she can recommend filing a Chapter 7 or Chapter 13 bankruptcy case, if that is what is right for you. Your Michigan bankruptcy attorney can also help you stay clear of options that may only put you in worse financial shape than before.
Bankruptcy may be a much better option than a home equity loan.
The major pitfall of all second mortgages, home equity loans, and home-improvement loans is that the creditor requires borrowers to pledge their home as collateral. The creditor acquires a lien on the property, and if the borrowers can't afford to make their monthly loan payments, the creditor can take the home through foreclosure, even if the borrowers are current with their first mortgage payments.
Home equity loans are often used as a "quick fix" for people who don't have sufficient income to repay their unsecured debts, but they can result in long-term payments that are beyond their means. All of the states have laws that protect a certain amount of home equity from creditors. These laws allow people to discharge their unsecured debts through a Chapter 7, and keep the protected equity in their homes. When people pay off their credit cards or other unsecured debts with a home equity loan, they turn dischargeable debt into secured debt that will survive filing unless the home is surrendered to the creditor.
These loans are attractive because they usually offer low interest rates and lower monthly payments, but the total amount of payments often adds up to be much greater than the original amount of debt.
Other pitfalls of home equity loans include "teaser rates" and "balloon payments". A "teaser rate" is a low introductory interest rate that can increase during the term of the loan, sometimes by several percent, drastically increasing the total cost of the loan. A "balloon payment" requires the borrower to pay off the entire amount of the loan after a set period of years. That usually results in more borrowing and new fees.
Contact Legal Helpers for a Free Legal Evaluation!