If a person is unable to pay his debts that borrower owes then the person is declared as bankrupt. Some people often considers it as an option that leads to home loan modification; but before a borrower is declared as bankrupt the lenders investigates all the borrowings of a person and if they are very much then the lender might reject the idea of modification of home loans.
In most of the cases where a borrower has applied for bankruptcy has ended with foreclosure of their loans, there are very less chances that the lender agrees for the home loan modification. So, a borrower must calculate the risk involved before he applies for bankruptcy with the bank.
The decision of bankruptcy will also have significant affect on the credit score of the borrower as bankruptcy is reflected in the credit record of a person for up to 10 years and hence can also affect the future borrowing plans.
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