Which is worst bankrutcy or Foreclosure?
Foreclosure is worst because you loss your home.
Your home is where your heart lies. Your family lives. Your friends hang out. Your children grow. It’s your santuary. It’s an important part of your identity. It’s where you find the most peace.
Foreclosure lowers your credit score more, too.
Bankruptcy and foreclosure give you the two biggest negative credit scores. Both lower your credit score in the neighborhood of 200 points. Both stay on your credit report 7 to 10 years. But the total effect on your score of bankruptcy is less because a bankruptcy gives you debt relief.
After you file bankrutcy it can be very easy to get new credit . This new credit is easier to get becase you are a much better credit risk–you have less debt and you cannot file bankruptcy again for 7 years.
In fact, it has been reported that if you immediately re-establish your credit after a discharge you can easily have a 700+ credit score after 2 years, and get a mortgage, as long as you have a good reason for the bankruptcy.
Your credit score is dynamic–constantly changing from month to month. And when you are in a position to pay your bills on time again, consistently, and if you monitor your credit carefully too, it will be obvious to you why this is so.
In fact, at some of the online credit services you can analyze your future credit score–for whatever time period you want and for different payment amounts and for different combinations of your debts–to see exactly how your credit score changes overtime.
For example, let’s say your credit score is currently 612 and you input values for your on-time car and mortgage payments for two months. The system will then crank out the change in your FICO score. Let’s say it raises your score 8 points; then it would show a score of 620.
In summary, which is worst bankruptcy or foreclosure? Forclosure is worst because you loss your home and your credit score hits bottom.
This information has been presented for educational and entertainment purposes only. The writer is not an attorney or accountant. For legal advice please speak to your attorney. For tax advice please speak to your tax professional. And for advice regarding real estate please speak to your realtor.
Tags: Bankruptcy, Foreclosure, foreclosure loans, Foreclosure Process, foreclosures, which is worse bankrutcy or foreclosure
April 18, 2008 at 7:14 pm
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey
April 18, 2008 at 7:22 pm
[...] Susan Pedersen wrote an interesting post today onHere’s a quick excerptBankruptcy and foreclosure give you the two biggest negative credit scores. Both lower your credit score in the neighborhood of 200 points. Both stay on your credit report 7 to 10 years. But the total effect on your score of bankruptcy … [...]
April 18, 2008 at 7:34 pm
[...] Read the rest of this great post here [...]