Foreclosure or Bankruptcy

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Saturday, April 25th, 2009 Subscribe To Our Feed

What’s the Difference between Bankruptcy and Foreclosure?

One must decide whether or not to choose bankruptcy or foreclosure. It is not usually easy and is rarely acceptable to make a decision that is black and white. A mortgage lender will file a foreclosure action when it is not paid its monthly mortgage payments. There is only on way to stop this from happening and that is pay the mortgage lender. The loan for a mortgage is similar to an automobile loan; when an individual fails to make his automobile payment, the vehicle is taken from him by being repossessed. It will be the same for anyone who has not paid his mortgage, the bank will foreclose on the house.

Bankruptcy is a last resort legal way to get out of paying your debts if you are unable to do so. if the debtor is in bankruptcy then all the civil proceedings are stopped. A mortgage lender must stop all legal actions, including foreclosure proceedings. 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. Going into bankruptcy does not solve the problem; it only makes the process proceed more slowly.

Bankruptcy can provide more time and manageable payments to a creditor to possibly avoid foreclosure proceedings. Because of the fact that in a situation of bankruptcy, a mortgage lender will have to suspend a foreclosure action, the debtor has some time to raise the money and pay off. Discharging unsecured debts through bankruptcy may enable you to have more money to pay the mortgage payments. A Chapter 13 bankruptcy doesn’t pay off all debts but instead sets up a more manageable payment plan for the debtor.

Not everyone qualifies for bankruptcy and Unfortunately if they do qualify, there are legal fees to pay. It could cost you more in legal fees and costs then it may to catch up your mortgage payments. If you are of the opinion that filing bankruptcy might let you prevent or stop a foreclosure proceeding, discuss it with a licensed legal professional. Bankruptcy is a complex process that is best handled by professionals.

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.

Loan Modification Agreement is arguably the most effective tool you can use if you are behind on your mortgage. Don’t lose your home due to foreclosure when you can take out a Mortgage Loan Modification that will help you keep your home and reduce your monthly expenses. A Mortgage Loan Modification can prevent foreclosure only if you act now before its too late. Click here www.loan-int.com/loan-modification/ for more information..

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