With only a few days until the “changing of the guard” welcoming the Obama Administration, talk about the housing crisis has hit the forefront.  Democrats are promoting a plan to allow bankruptcy judges to modify home loans as government loan programs don’t seem to be working.  The question becomes, what’s a better plan – personal bankruptcy or foreclosure?  According to FICO scoring entities (the makers of your credit score), neither are great options.  While foreclosure is a better way to go than personal bankruptcy, it still delivers a major blow to your credit score.  Bankruptcy is worse because it affects more than just your home loan account, it affects everything.

Many out there are speculating that the crisis will become much larger as prime borrowers continue to lose equity in their homes and assets turn negative.  However, the folks at FICO say that even if foreclosures double from today’s numbers, 90% of people are still paying loans on schedule.  The fear factor is running amok and it’s certainly not helping the general economic environment.

Foreclosure will drop your credit score about 200 points immediately and declaring personal bankruptcy is really no better.  This not only affects your ability to purchase a new home, but potentially also your ability to rent or get a job.  So what can troubled Ann Arbor homeowners do?  Our team at Kathy Toth has created a foreclosure relief division to help Ann Arbor residents.  Each situation should be weighed carefully to assess the best possible scenario for the homeowner.  Often times a short sale to or through the bank is a very viable option.  This is kinder to your credit and a safer way out.  We have helped many homeowners, saving local communities and families one at a time. 

If you are in a distressed situation, please don’t hesitate to call our Ann Arbor Short Sale experts.  The process is confidential and free.  You can start online at www.AnnArborShortSale.com or call the Toth Team at (734) 669-0337.  We are here to help!   

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