Nonfinancial debt increases the chances that you’ll obtain a mortgage loan. However, it increases the risks of doing business with clients who cannot repay their debts. Housing loans in Michigan are usually provided by banks and financial institutions, but there is the alternative option to get involved in the nonfinancial sector.
Nonfinancial debts
Nonfinancial debt is provided by a nonfinancial institution like the government, a business or a private home that is not part of the financial industry. Your mortgage can be issued by a nonfinancial business that is not a formally recognized financial company.
One type of nonfinancial debt for a mortgage is secured. The buyer offers collateral, such as the home itself, to ensure that the debt can be paid off. Anyone who is borrowing a home mortgage loan is using the house as a secured debt. For many nonfinancial institutions, secured financing is the best and only guarantee that a loan borrower will repay a debt.
Mortgage debts and bankruptcy
A bankruptcy allows you to discharge a mortgage debt and other secured debts. Under Chapter 7, you’re able to claim an exemption and keep your property throughout the bankruptcy if you continue making payments. A chapter 13 bankruptcy also allows you to keep the property as long if you follow the repayment plan.
Keep your bankruptcy benefits
Having a mortgage loan from a nonfinancial business is not detrimental to your bankruptcy plan. You can still discharge your mortgage loans and keep your home while making repayments. The bankruptcy court provides a number of lenient options for homeowners who are willing to pay off their debts.
