bankrupcty

Bankruptcy versus Foreclosure

Sometimes people have to choose between filing bankruptcy or letting their mortgage lender foreclose on their property. The right decision is taking immediately is not very easy. A mortgage lender will file a foreclosure action when it is not paid its monthly mortgage payments. The single method of stopping this from happening in to make the payment to the mortgage lender. Just like a car being repossessed for non-payment, a mortgage lender can foreclose on a property for non-payment. So, this is identical to what will occur if someone fails to pay their mortgage – foreclosure will take their home from them.

Bankruptcy is a last resort legal way to get out of paying your debts if you are unable to do so. These steps put a halt to proceedings against the debtor while the person is in bankruptcy. So, by law, a mortgage lender has to suspend all legal actions including a foreclosure action. But, a mortgage loan company may apply for relief from the mandatory stay, and once it is granted, can go ahead with the previously mentioned action. The truth is bankruptcy does not stop foreclosure nor does it allow you to keep your house with out paying the mortgage lender. Bankruptcy only slows down the process and does not eliminate the situation.

While bankruptcy doesn’t stop foreclosure, it gives a person time to repay or at least makes easy to repay a mortgage lender. Since bankruptcy requires a mortgage lender to suspend a foreclosure action, a debtor has a little time to raise the money to pay the lender. In addition, because bankruptcy may get rid of certain unsecured debts, the debtor might be able to free up funds that he can use to make mortgage payments. A Chapter 13 bankruptcy doesn’t pay off all debts but instead sets up a more manageable payment plan for the debtor.

Sadly, not every person will be eligible for bankruptcy, and even if they are found eligible, there are still legal costs. It could cost you more in legal fees and costs then it may to catch up your mortgage payments. If you think that bankruptcy may help you stop or avoid foreclosure, talk with a licensed lawyer. Bankruptcy is complicated enough that you need to hire a lawyer who knows what he or she is doing.

This article is general information so if you have any questions of any nature about this subject then you need to talk with a lawyer licensed in your state.