debt

Top 8 bankruptcy tips for '08

In the upcoming year, many people will be calling me to discuss their delinquent mortgage status. Bankruptcy will become one option that homeowners will consider when they fall behind on their mortgage, but may still be able to save their home. In Southern California alone, DataQuick Information Systems research shows that banks repossessed 5,803 homes in six counties -- up from 753 during the same period last year.

While this will be a boom for my profession, this windfall will come with intense suffering for thousands of families throughout our country. For 2008, let's focus on the silver lining, as some will be facing many dark days ahead.

8 tips for financial hard times

1. Spend quality time with friends and family. Throughout a difficult financial period, people tend to close themselves off and hide from people. No one feels like talking or seeing friends and family when their world is in financial upheaval. However, your closest circle will be your most valuable asset.

2. Eliminate the word 'shame' from your vocabulary. Quite often, an overwhelming feeling of shame comes over people when dealing with financial turmoil. There will be no benefit to you, your family or your situation if you blame yourself or become depressed. A positive attitude throughout a financially difficult time will increase the likelihood that you recognize unforeseen opportunities to "right your ship."

3. Don't turn into an ostrich. If you believe you will have difficulty making your mortgage payments, then you must become proactive immediately. Do not bury your head in the sand, hoping "something good will happen." You must be proactive because you have the most options available to you when you first see signs of trouble.

4. Perform an honest assessment of your financial situation. Many people have adjustable rate mortgages and may be facing a rate increase in 2008. Do not wait until your rate adjusts before determining whether you can afford the new payment. Review your income and expenses to make sure that keeping your home is the right thing for you and your family.

5. Get advice. Talk to anyone you can to discuss your situation. You never know when a completely innocent conversation could lead to a positive solution. Keep your mind open to the comments of those around you. Someone might have experienced the same challenges in the past and found a solution that had not occurred to you.

6. Try to save your credit. If you perform an honest assessment of your financial situation, then you will see whether you need to sell your home immediately. This will save your credit so that you can qualify for another mortgage later on. Try not to compound the loss of your home with hits to your credit report.

7. Don't neglect yourself. Even though you may be facing financial chaos, make sure you take care of your health and your other assets, like your car.

8. Do not get an adjustable rate mortgage. Many experts predict that we are just seeing the beginning of the credit crunch and mortgage woes. For those with equity in their home and good credit to qualify for a loan, try to refinance into a fixed-rate mortgage. Credit has become tougher to obtain in the past year and lenders appear to be tightening up even further for 2008. If you need to refinance this year, consider one of the many loan packages with a fixed interest rate. Rates are still low and you don't want to get caught needing to refinance any time soon.

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