DEAR BOB: I am a single mother who owes about $27,000 in credit-card debt. I also owe $177,650 on my home mortgage. It is my primary residence. Can I file bankruptcy without including my mortgage so I won’t lose my home? – Fabiana B.
DEAR FABIANA: Please don’t file bankruptcy unless you fully understand the adverse consequences. Your credit will be ruined for at least two years, usually longer.
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Unless your home is in Florida or Texas, which have unlimited homestead protection for homeowners who file bankruptcy, if you file Chapter 7 “ultimate” bankruptcy, the bankruptcy trustee could insist your home be sold to pay your creditors.
If you just need to spread out your credit card payments over 60 months or less, and perhaps reduce the interest rate, Chapter 13 bankruptcy reorganization might be best for you. However, if you owe far more than your assets, and if you don’t have enough income to make deferred payments, Chapter 7 bankruptcy might be your only choice.
Please consult a local low-fee credit consumer counseling service for details about your choices. But don’t get tricked into one of those high-cost “credit restoration” rip-off firms, which usually obtain minimal or no results. If you consult a bankruptcy attorney, he or she might suggest you file bankruptcy when you don’t really need to do so.
Can home buyer purchase a car without ruining credit?
DEAR BOB: I plan to buy a home later this year. But I need a car now. Will buying a car adversely affect my credit rating? I have no car payments now and owe less than $3,000 credit card debt – Rock D.
DEAR ROCK: If you need a car, go ahead and buy it as soon as possible so you can establish an on-time auto payment record with the credit bureaus. This shouldn’t affect your FICO (Fair Isaac and Co.) score adversely and might even help it.
You can check your credit report and obtain your current FICO score for $12.95 at MyFICO.com.
Why every realty buyer needs owner’s title insurance
DEAR BOB: Is it possible to buy a condo without title insurance? We have purchased a condo which is under construction. Since this condo didn’t exist before, it seems logical that a title search is useless. Am I right? – Carroll C.
DEAR CARROLL: To be blunt, you are wrong. An owner’s title insurance policy should always be obtained when acquiring any property, especially new construction.
For example, maybe your seller didn’t pay all the sub-contractors and they filed mechanics’ liens against your new condo.
Your mortgage lender will insist on receiving a mortgage lender’s title insurance policy. You should also insist on an owner’s title policy to protect your home equity from the many potential unexpected title loss risks that might occur.
The new Robert Bruss special report “Secrets of Tax-Free Reverse Mortgage Income for Senior Citizen Homeowners” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at (800) 736-1736 or instant Internet download at BobBruss.com. Questions for this column are welcome at either address.
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