Foreclosure Or Bankruptcy By: Tony Dean

Many people are not sure if they should file bankruptcy or allow a foreclosure. However, it is not as simple as a case of either/or and a decision cannot be made this easily. A mortgage lender will file a foreclosure action when it is not paid its monthly mortgage payments. Paying the lender is the only true way this action can be prevented. As an example, if you don't pay your car payment every month, your car will be repossessed. Like repossession, foreclosure will take away a person's home if they do not keep up with the monthly payments they owe on their mortgage.

In some cases, you might experience debt so large that you can no longer pay your debt, and in this case, a legal action of bankruptcy might be filed. For the duration of the debtor's time in bankruptcy, this action stops the civil law actions against the debtor. This means that the mortgage lender cannot continue through with their legal actions, including a foreclosure. Still, the lenders are not left out in the cold, because they will file for relief from the stay. In other words, no, bankruptcy will not stop foreclosure - the only way to do this is to make payments to your lender. Bankruptcy will slow the action, but it will not prevent it.

Sometimes a foreclosure is avoided through a bankruptcy, because bankruptcy boosts the time a person has to make the payments. 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. Also, since bankruptcy can discharge some unsecured debts, 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 the mortgage catch up amount over a period of time.

Unfortunately, not everyone qualifies for bankruptcy and if they do qualify, there are legal fees to pay. The legal costs and fees may be more than the amount needed to catch up and make current mortgage payments. If you think that bankruptcy may help you stop or avoid foreclosure, talk with a licensed lawyer. No one should attempt a complicated legal process like bankruptcy without legal aide. 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.

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