The short answer is: it depends.

What makes sense for one person may not make sense for another based on your financial situation. If the stars are lined up properly, a Chapter 7 bankruptcy is sometimes the perfect solution to your financial woes.

If you fit the profile for a Chapter 7 bankruptcy, the main drawback is the negative impact on your credit score; but let’s be honest here. If you are this close to filing bankruptcy, your credit is probably not that great to begin with. Sometimes the only way to rebuild a house is to tear it down and start over, which is what a Chapter 7 bankruptcy will allow you to do.

It is important to remember that a Chapter 7 bankruptcy will liquidate, or wipe out, most of your unsecured debts (like credit cards and medical bills), where a debt management program simply reduces interest rates and allows you to repay over time. But there are strict rules involved in debt management that usually prohibit you from using your cards again for any reason. Here are some factors to consider:

Do you own or rent your home? One of the big stumbling blocks for people wishing to file bankruptcy is that they have too much equity in their homes. To figure out how much equity you have, simply take the current value of your home and subtract how much you owe on your mortgages; be sure to include home equity loans in that figu…………… continues on Patch.com

(Updates with excerpt from filing in fifth paragraph.)

May 15 (Bloomberg) — Residential Capital LLC, the bankrupt mortgage company indirectly owned by the U.S. government, won court approval to quit funding $ 1.7 billion in consumer home- equity lines of credit to conserve cash.

U.S. Bankruptcy Judge James Peck today approved the company’s request to tell customers it will no longer fund their so-called heloc loans. Peck ordered ResCap to provide consumers with information about their legal rights related to the loan contracts.

“I consider this to be a fairly important matter,” Peck said in court in Manhattan.

ResCap filed for bankruptcy yesterday with plans to sell most of its assets to Fortress Investment Group LLC. The company listed assets of $ 15.7 billion and debt of $ 15.3 billion in its petition in U.S. Bankruptcy Court in Manhattan. ResCap’s Chapter 11 filing is the biggest this year, based on liabilities, according to data compiled by Bloomberg.

Today’s decision means ResCap will no longer loan money to consumers who have approved, home-equity lines of credit. Funding such loans would “create liquidity concerns for the estates,” ResCap said in court papers.

The company will continue to service loans that alread…………… continues on San Francisco Chronicle

Dear Dr. Don,
We recently refinanced our mortgage of $ 87,000 to get a lower monthly payment. We just found out the loan we have is not really a mortgage but a home equity line of credit. Are we at a disadvantage with this type of loan? It’s a 15-year loan at 3.99% interest with a $ 500 penalty if we pay it off in the first three years. We always buy down the principal when possible. The line is secured by the property. Does this type of loan cost more in the long run? Can I still get another home equity line of credit or second mortgage, if necessary?

Thanks,
– Robin Refi

Dear Robin,
Home equity lines of credit, or HELOCs, and home equity loans are secured by the property. To the extent allowed by the tax code, based on the size and use of the loan proceeds, the interest expense is tax deductible.

Home equity lines and loans used to be called second mortgages. That’s because there was almost always a first mortgage that was first in line to be repaid in the event that the home went in to foreclosure. (That’s why it’s called a first mortgage.) When you use a HELOC to refinance your first mortgage, however, then the HELOC gets to sit first chair, and it has first dibs on the home’s value in foreclosure.

There are two disadvantages to a HELOC. One is that the interest rate is variable and can cha…………… continues on Fox Business

Residential Capital LLC, the bankrupt mortgage company indirectly owned by the U.S. government, won court approval to quit funding $ 1.7 billion in consumer home- equity lines of credit to conserve cash.

U.S. Bankruptcy Judge James Peck today approved the company’s request to tell customers it will no longer fund their so-called heloc loans. Peck ordered ResCap to provide consumers with information about their legal rights related to the loan contracts.

“I consider this to be a fairly important matter,” Peck said in court in Manhattan.

ResCap filed for bankruptcy yesterday with plans to sell most of its assets to Fortress Investment Group LLC. (FIG) The company listed assets of $ 15.7 billion and debt of $ 15.3 billion in its petition in U.S. Bankruptcy Court in Manhattan. ResCap’s Chapter 11 filing is the biggest this year, based on liabilities, according to data compiled by Bloomberg.

Today’s decision means ResCap will no longer loan money to consumers who have approved, home-equity lines of credit. Funding such loans would “create liquidity concerns for the estates,” ResCap said in court papers.

The company will continue to s…………… continues on Bloomberg

Canada’s banks, ranked the soundest on the planet by the World Economic Forum, aren’t immune to collapses triggered by falling housing prices, according to the government official implementing new mortgage rules.

Previous failures of Canadian financial institutions were due to bad real estate lending and sharp falls in housing prices, and these can happen again, Vlasios Melessanakis, manager of policy development at the Office of the Superintendent of Financial Institutions, wrote in documents obtained by Bloomberg News under freedom-of-information law. The last failure in Canada was in 1996.

“Canada is not immune,” Melessanakis wrote March 21 in internal notes responding to a posting on a mortgage-industry website. “Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”

The comments underscore tension between policy makers and mortgage lenders as a booming housing…………… continues on Bloomberg

Q. I have a second and third mortgage on my house. Can the lenders of my second and third mortgage foreclose on my house even if I make all my payments to my first mortgage lender in timely manner? Is there any way that I can short-sell my house?

Your letter reminds us of the go-go years of real estate, where property values were rising so fast that many homeowners took out several home equity lines of credit — and home equity lenders happily agreed to sit behind the primary, secondary and even tertiary lender.

Sam once had a case where the owner of the property had 10 lenders. The house had dropped in value, and the owner wanted out. Sam was able to negotiate an end to the stalemate — after a long period of time — and get the house sold. (We don’t recommend that any one property have 10 lenders, by the way.)

In general, any lender can foreclose on your home. A second lender can foreclose on the house but would be subject to the loan made by the first lender. And the third lender could foreclose on the house but would be subject to the debt on the home held by the first and second lenders.

Let’s say that your property was worth $ 500,000 at the peak of the housing market in 2005. Your first loan was for $ 350,000 and the second loan was for $ 100,000 and the third lender then gave you $ 50,000. The housing bubble burst and now you…………… continues on NorthJersey.com

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State Regulation of Second Mortgages & Home Equity Loans – M

Now for the exceptions:…………… continues on MarketWatch

Brazil’s homebuilders are turning to private-equity firms for financing as banks withdraw lending after cost overruns added to rising debt burdens.

Billionaire Sam Zell’s Equity International, Paladin Realty Partners LLC and Prosperitas are offering to fill a funding gap as Brazil’s President Dilma Rousseff tries to make good on her promise of 2 million new homes by 2014. The portion of bank deposits used to finance home construction fell 17 percent in the first quarter to 6 billion reais ($ 3.1 billion) from a year earlier as loans to buy houses rose 32 percent to 11.6 billion, according to Abecip, Brazil’s mortgage lenders association.

“That gap is very profitable and it’s virtually unlimited in terms of potential opportunities,” said Gary Garrabrant, Equity International’s chief executive officer and a co-founder with Zell. “I’d be delighted to invest hundreds of millions of dollars into this sector.”

Banks are tightening credit to homebuilders after surging labor costs shrank margins and triggered costly delays, according to Guilherme Rocha, an analyst with Credit Suisse Group AG, even as Brazil’s central bank cuts interest rates to a near-record low to bolster economic growth. Investors are being enticed to lend directly to construction projects with returns of as much as 23 percent, almost three times the 8 percent yield for gl…………… continues on BusinessWeek

Q. My wife and I are in the process of a divorce and she wants to remain in the home that we jointly own. We have a mortgage balance of about $ 342,000. I think we could sell the house for clos…………… continues on Washington Times

(Source: Sen. Jeff Merkley) - Washington, DC- Today, Oregon’s Senator Jeff Merkley introduced the Rebuilding Equity Act, a bill that will lower costs for some homeowners seeking to refinance through the Home Affordable Refinance Program (HARP).  Under this bill, if homeowners who are current on their mortgage seek to refinance into a 20-year loan term or shorter, Fannie Mae or Freddie Mac will cover the closing costs, a benefit averaging $ 3,000 per homeowner. In addition, families will benefit from substantially lower interest payments due to today’s record-low interest rates.

“This is simple,” Merkley said. “If homeowners keep paying the same monthly payment on a shorter mortgage when they refinance, they’ll be back above water more quickly. A majority of Oregon families that choose to refinance through this option will regain equity in their homes within 5 years. A pathway that puts America’s families back above water is great for the families and great for the economy.”

To be eligible, a homeowner must agree to refinance into a loan with no more than 20-year term, with monthly payments roughly equal to those they make under their current loan. For borrowers…………… continues on LoanSafe

Shares of the following companies may have unusual moves in Thailand trading. Stock symbols are in parentheses and prices are as of the close yesterday.

The SET Index (SET) rose 0.3 percent to 1,231.04.

CP All Pcl (CPALL) : Thailand’s biggest convenience store operator said net income in the first quarter jumped 32 percent to 2.76 billion baht ($ 89 million). CP All gained 3.4 percent to 38.5 baht.

Eastern Water Resources Development & Management Pcl (EASTW) : The country’s largest private water supplier said first- quarter net income rose 37 percent from a year earlier to 324.3 million baht. Eastern Water declined 0.6 percent to 8.6 baht.

continues on Bloomberg

ATLANTA -

Many senior Americans find themselves in the awkward position of having lots of equity in their home, unable to qualify for a refinance loan, and wishing they had a way to get some cash out of their house.  

Several years ago, the concept of a reverse mortgage was introduced,  but they were very expensive and hard to understand.  Today, FHA has created program that meets many senior needs at a reasonable price point. FOX 5 real estate expert John Adams joined Good Day with some details.

For more information, visit John’s website at Money99.com

Q: What is the reverse mortgage program about?

The FHA’s “Reverse Mortgage” program allows senior homeowners to withdraw some of the equity in home.  For seniors with substantial equity, it can be a lifesaver. It has high start-up costs, but if you are in good health and can use the funds, it can be a great way of tapping into your equity and staying in your home.

It’s actually called the HOME EQUITY CONVERSION PROGRAM, and it’s a safe plan that can give older Americans greater financial security.

Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and pay for…………… continues on MyFox Atlanta