bankruptcies

What’s the Difference between Bankruptcy and Foreclosure?

Sometimes people have to choose between filing bankruptcy or letting their mortgage lender foreclose on their property. Decision-making is not just a matter of yes or no, it is not that simple. A foreclosure proceeding will be resorted to by a mortgage lender it the monthly mortgage obligations are not met. The single method of stopping this from happening in to make the payment to the mortgage lender. Mortgage loans are just like car loans, if you do not make payments you will lose it. It will be the same for anyone who has not paid his mortgage, the bank will foreclose on the house.

Bankruptcy is a legal action filed by someone who cannot pay his debts. This action stops all civil proceedings against the debtor while the debtor is in bankruptcy. Therefore, according to law, the mortgage lender must stop all legal action (including foreclosure). However, a mortgage lender can file for relief from the automatic stay, and when the relief is granted, simply proceed with the aforementioned action. The bottom line is that bankruptcy does not stop foreclosure and it does not allow a debtor to keep a house without paying the mortgage lender. Bankruptcy does not eradicate the situation; it merely slows the process down.

Bankruptcy can help give a person the needed time, and sometimes make it easier to pay their mortgage lender. It will not, however, stop foreclosure should they still not be able to pay. Because bankruptcy forces a mortgage lender to stop the foreclosure proceeding, it gives the debtor additional time to come up with funds to repay the lender. It is the last resort for any debtor to declare bankruptcy when he is totally unable to meet his creditors commitments. Under such circumstances, he may be discharged by some unsecured debts but under mortgage, he shall be prepare to repay the debt within the given time as the debt is secured by tangible assets. In addition, chapter 13 bankruptcy is a fee schedule that is court-ordered, and lets the debtor make payments on his mortgage to get up to date on his balance across a time frame.

Not everyone qualifies for bankruptcy and Unfortunately if they do qualify, there are legal fees to pay. The amount of money you need to get your mortgage payment current may be nothing compared to the legal fees you will have to pay. If you are of the mind that declaring bankruptcy may benefit your situation and help you get out of a foreclosure, a good lawyer should be able to answer your questions. Bankruptcy is so detailed that you should not try to handle it by yourself.

We have reproduced the general information in this article and if you have any queries of any sorts on this subject be sure to consult with a advocate licensed in your state.