Bankruptcy vs Foreclosure
Some people think: “Should I file bankruptcy or just let my mortgage lender foreclose”?Basically, it is not an either/or decision.
A mortgage lender will file a foreclosure action when it is not paid its monthly mortgagepayments. The only way to stop a foreclosure action is to pay the mortgage lender. A mortgageloan is sort of like a car loan. If a person does not pay his car payment, he will lose the carthrough repossession. If a person does not pay his mortgage payment, he will lose his homethrough foreclosure.
Bankruptcy is a legal action filed by someone who cannot pay his debts. It stops all civilproceedings against the debtor while the debtor is in bankruptcy. So, by law, a mortgage lenderhas to suspend all legal actions including a foreclosure action. However, a mortgage lender canfile for relief from the automatic stay, and when the relief is granted, simply proceed with theforeclosure action. The bottom line is that bankruptcy does not stop foreclosure and it does notallow a debtor to keep a house without paying the mortgage lender. Bankruptcy only slows downthe foreclosure process.
While bankruptcy does not stop foreclosure, it can give a person time to pay a mortgage lender ormake it easier for a person to pay a mortgage lender.
Since bankruptcy requires a mortgage lender to suspend a foreclosure action, a debtor has a littletime to raise the money to pay the lender. Also, since bankruptcy can discharge some unsecureddebts, a debtor may have more money with which to pay his mortgage payments.
Also, a chapter 13 bankruptcy is a court ordered payment plan and allows a debtor to pay themortgage catch up amount over a period of time.
Unfortunately, not everyone qualifies for bankruptcy. And, if they do qualify, there are legal feesto pay. The legal costs and fees may be more than the amount needed to catch up and makecurrent mortgage payments.
If you think that bankruptcy may help you stop or avoid foreclosure, talk with a licensed lawyer.Bankruptcy is so detailed that you should not try to handle it by yourself.
This article is general information. If you have any questions of any nature about avoiding foreclosure, talk with a lawyer licensed in your state.
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