HA Mortgage Program

One of the popular choices for those who need it is nothing other than the simple and basic FHA mortgage program. Way back in the 1930's, the FHA was already the best option for low income families as well as those who were borrowing money for the very first time. But as the years passed, a lot of additions and expansions to the FHA program envelopes almost all types of people who need to borrow money.

Right now, there are roughly 30 million clients. This is undeniable proof that applying for their loan programs is really beneficial. So what are the advantages of applying for this federal program?

- This type of loan will give you leeway to purchase a house with a miniscule down payment. Future homeowners will only need to shell out a down payment worth 3% of their entire home purchase value. There are also some instances when the down payment can be given in gift form. One must be aware though that aside from the down payment amounts there are usually other fees to take care of such as insurance and processing.

- FHA loans are unlike the mortgages that have taken over the market during recent years, and these are the very loans with hidden triggers high interest rates and that inevitably caused the wave of foreclosures. A loan from the FHA will not contain any such traps hidden within the terms and conditions. The consumer can rest assured that there will be no predatory payment increases.

- A lot of lenders and banks who give out mortgage loans are very careful with screening. They sometimes need proof that the applicant has money. What this usually means is that one will need thousands stored up beyond the down payment amount just so that they could qualify for the loan. FHA mortgage program does not have this difficult requirement.

- Sub-prime financing can be replaced by an FHA approved loan. And what is good about this is that FHA rates are much lower compared to those of sub-prime mortgage. Also, one does not need to shell out for pre-payment and FHA mortgages have a secured, fixed rate.

- Those who are troubled with bankruptcy and foreclosures should look into what the FHA has to offer. Unlike with non FHA approved lenders, the Federal Housing Administration give loans to people after three years for a foreclosure, a year past bankruptcy chapter 13, and two years for a chapter 7 bankruptcy.

- A potential borrower can apply and get an FHA mortgage program by providing repayment capacity, cash to close, credit history, and collateral. However, for those who do not have conventional credit, other documents such as rental payment slips, utility receipts, and car insurance receipts.

- With this type of loan, one may be able to get a lot more money than in conventional loan packages since the qualifications are very liberal. It is very similar to loans given to first time borrowers. One can get as high as 43% of one's monthly paycheck.

Making a Decision

For many people, it's no big secret that declaring personal bankruptcy is not necessarily good news, that it definitely is not easy and that it comes with consequences. So as well as considering whether you have alternatives to declaring bankruptcy before you decide to do so, you also need to familiarize yourself with the potential harmful consequences and make sure you know how you will deal with them.

First of all, your financial reputation will be tarnished. Your credit record will carry information ascertaining to your declaring bankruptcy for around ten years. This is going to make it very, very difficult to obtain any kind of finance and in situations you find you are able to get credit, you will find yourself on the receiving end of very high interest rates. You can rebuild good credit, however.

You may also find that your family members and close friends have little sympathy. Many people, particularly those of an older generation, a generation before hire purchase and when everyone only bought what they had the cash for, struggle to understand credit, excessive finance and thus bankruptcy. You may also feel embarrassed about declaring personal bankruptcy and feel that relationships are strained with those who feel let down by this.

You should also bear in mind that declaring personal bankruptcy is a matter for public record. Everyone can find out this happened to you. Of course, it's probably only a real issue if you live in a small town where everyone seems to know everyone else's business thanks to issues like this being posted in the local newspaper. It's highly unlikely that such a public announcement of your bankruptcy would take place if you live in a large city.

Finally, this may affect job applications negatively. While there is law in place that stipulates discrimination to be illegal, certain jobs do require you to pass a credit check.

Guide to Bankruptcy

Bankruptcy is the final solution to dealing with your financial issues - it is the measure of last resort and should never be undertaken lightly nor without professional advice and assistance. In a nutshell, bankruptcy is where all your assets are liquidated and sold with the proceeds being distributed to your creditors; after a period of supervision, which is 12 months in the UK, you are now free and clear to restart your life without the burden of your debts.

The devil is in the detail - "all of your assets are liquidated and sold", and this includes your home, your business if you are self-employed, your vehicles and your investments as well as any savings if you have them.

The most common factor is of course, losing your home and having to move your family to usually, rented accommodation.

You can be made bankrupt in two different ways - voluntary bankruptcy is where you file your own petition with the court to have you declared bankrupt and involuntary bankruptcy, which is where a creditor who you owe more than £750 files to have you declared bankrupt.

The process is started by filing a petition with the High Court in London or if you live out of the London area, with your local county court. The Official Receiver, a court officer who is appointed by the Secretary of State, will then advertise the bankruptcy in the London Gazette which is a publication dealing with legal notices. They are responsible for acting as your trustee in bankruptcy and are required to oversee the liquidation of your assets and the fair distribution of them to your creditors. They are also required to ensure you are honest in your dealings and are not concealing assets from your creditors. In addition, they are also responsible for making sure the bankruptcy notice is distributed to the various agencies involved and who have an interest in any bankruptcy order such as HM Land Registry, bailiffs, other courts handling your financial issues, and HM revenue and Customs.

An Insolvency Practitioner may be appointed as your trustee in bankruptcy as an alternative to the Official Receiver. An Insolvency Practitioner is a qualified professional who is authorised to act as your trustee in bankruptcy and do all of the functions normally performed by the Official Receiver. They will also perform the supervision of your finances for the next 12 months until you are eligible to be discharged. Discharge is usually granted after the 12 month period and you are now a discharged bankrupt and free to pursue your life without any financial supervision or restraint though the fact you have been declared bankrupt will be recorded and obtaining credit and a mortgage to buy a home may be more difficult.

Bankruptcy may be a simple and relatively quick method of clearing your debts but it is not suitable for many people; indeed, there are a number of other methods for dealing with your debt situation which do not include losing your home. It is absolutely vital that you seek professional and independent advice at the very earliest stage - the sooner you seek advice then the quicker and easier it will be to come up with an alternative that falls short of losing your home and assets.

Bailout Program

It seems with this financial crisis everyone is getting a bailout. The banks, wall street, car manufactures, even the postal service needs help, how about the average guy? Explore why bankruptcy is one form of a bailout for the average person.

Why Bankruptcy?

The bottom line in today's financial system for a person who is deep in debt without hope is bankruptcy. The number 1 thing that holds people back from dealing with this issue is fear, lack of understanding. It's true, this is not a pleasant subject to talk about, but faced with legal ramifications due to debt problems it's an option you must consider.

Historically bankruptcy is as old as man himself. Debt is not something new, in fact going back there was debtors prison where jail was an option for non-payment. Now compared to that system bankruptcy isn't so bad. It doesn't seem right that a bank could go out make risky loans, make billions of dollars, sell them off to the Feds and start all over again, but they do. That's the way the system works, bankruptcy is what's provided for the average person.

Debt causes emotional stress, this makes your thinking cloudy. Out of all the debt help programs bankruptcy is the only option that provides legal protection. You know there are 2 types for personal use, there's chapter 7 and 13. If you qualify for chapter 7 you'll have a full discharge of all qualified debt. The downside is you can't file again for 8 years and it's on your credit report for 10 years. The upside is your pretty much debt free, this is a fresh start.

The quicker you get past the stigma of the word bankruptcy and your concern of what other people think, the quicker you can look objectively at what's best for you.

Nothing to Fear

When people with debt trouble turn to the bankruptcy options -- either Chapter 7 bankruptcy or Chapter 13 bankruptcy -- they are often intimidated by the prospect of having to be subjected to a bankruptcy means test.

Ensure Eligibility

In reality, it seems the Chapter 7 means test is meant to ensure people with debt trouble do not file for the wrong type of bankruptcy protection. For many, being able to retain control and ownership of valuable and necessary assets, such as a home or vehicle, is vitally important. The Chapter 7 means test, therefore, aims to promote Chapter 13 bankruptcy as an alternative to a liquidation under bankruptcy.

Median Income

As well, the Chapter 7 means test will evaluate an applicant's ability (or lack thereof) to repay debt. The Chapter 7 means test will measure an applicant's income against state or regional median income levels. When actual income far exceeds median levels, the Chapter 7 means test will need to be met another way.

Approved Exemptions

In realizing the intention of the Chapter 7 means test, many people then become fearful that they will not "meet" the standards, particularly if their income exceeds the median income or if their expenses outweigh those maximum exemptions permitted by the IRS. With this in mind, applicants are given multiple ways to meet the Chapter 7 means test. In some cases, applicants will need to provide additional information.

Do Not Fear The Chapter 7 Means Test

As outlined above, the intention of the Chapter 7 Means Test seems to be to ensure applicants are filing for the right type of protection. In that sense, the means tests is really to protect applicants and, specifically, their rights to retain specific assets in bankruptcy.

Applicants are encouraged to familiarize themselves with the different forms that comprise the Chapter 7 means test.