Which Is Worse Foreclosure or Bankruptcy
Some people, when faced with the choice between foreclosure and bankruptcy, are not sure which is the right one to choose. Few people realize how difficult the choice is to make, or recognize that the decision is not an either/or one.
The only way to stop this is to pay the mortgage lender. Most people realize how important it is to make your car payments on time every month, if you do not want to have your car repossessed. Similarly, an individual may lose their home through foreclosure if they do not keep up with the monthly payments on their mortgage.
If a person’s debt is so bad that they cannot pay their debts, then they sometimes must file bankruptcy. This action stops all civil proceedings against the debtor while the debtor is in bankruptcy. A foreclosure can be halted through these means because lender is required to cease all their legal actions against the debtor.
Once they are granted such relief, they will continue with their legal actions against the home buyer. In other words, no, bankruptcy will not stop foreclosure – the only way to do this is to make payments to your lender. The only thing that bankruptcy can do is slow down the inevitable process.
Occasionally, however, foreclosure is prevented through bankruptcy, as the latter gives person additional time in which to pay the lender and usually makes the paying easier. As bankruptcy makes a mortgage lender temporarily cease a foreclosure action, a debtor has additional time to raise money to pay the lender. The debtor may also have have several of their other debts eliminated due to bankruptcy, so they are able to have additional money available to pay their mortgage. In terms of a chapter 13 bankruptcy, the courts will dictate that the payment of the overdue mortgage needs to be paid through several payments, which will further give the debtor time to pay the lender off.
In order to file for bankruptcy, you must first qualify – which not everyone does – and even if you do, you will be faced with large legal fees. Legal costs and fees might actually end up being more than the amount needed to catch up on the past due mortgage payments. If you find yourself in a situation where you think bankruptcy can stop or stall foreclosure, you should discuss it with a lawyer. Bankruptcy is so detailed that you should not try to handle it by yourself. This article is only intended to give general information, so for more detailed information, contact a lawyer in your state.
Filed under: Business