Are You Looking For Bankruptcy or Foreclosure?
It can be very difficult to choose between settling for bankruptcy or allowing a foreclosure to take place. This major financial decision will affect you for a long time, and you should realize that this isn’t a case which should be made simply, nor is it necessarily a matter of choosing one over the other. A foreclosure occurs when a mortgage lender is not paid its monthly payments. Paying the lender is the only true way this action can be prevented. Another type of loan, a car loan, will result in the loss of your car through repossession if you are not diligent in paying your loan. Therefore the same result will apply to a person who does not pay his mortgage payments - he will lose his home through foreclosure!
Bankruptcy is an action which is declared by a person incapable of paying their debts. This will put an end to the civil actions being filed against the debtor during the time they are in bankruptcy. The mortgage lender is required by law to halt their foreclosure actions. Once they are granted such relief, they will continue with their legal actions against the home buyer. Bankruptcy does not allow you to keep a home that is not paid for to the mortgage lender, and it will not stop foreclosure. While it cannot stop the action, bankruptcy can slow it down.
While bankruptcy does not stop foreclosure, it can give a person time to pay a mortgage lender or make it easier for a person to pay a mortgage lender. Because bankruptcy makes a lender suspend foreclosure, a debtor will have extra time to get the money to pay the lender. In addition, since bankruptcy can discharge many other debts completely, a person in debt might have more funds available to pay their mortgage. Also, a chapter 13 bankruptcy is a court ordered payment plan and allows a debtor to pay the mortgage catch up amount over a period of time.
Of course, there is a good chance that a debtor might not actually be able to file for bankruptcy, as eligibility is an issue, and even if they do qualify, there are legal fees that need to be paid. Legal bills can be quite high, and high enough that they outweigh the costs of catching up with the mortgage. Discussing bankruptcy over with a licensed lawyer is an important step for anyone trying to avoid or halt a foreclosure. Without legal assistance, bankruptcy is too complicated to endure by yourself. Talk to a licensed lawyer in your area for more specific area that is outside of the scope of this general article.
