What’s the Difference between Bankruptcy and Foreclosure?
Foreclosure or Bankruptcy
Some people consider whether or not they should file bankruptcy or just let their mortgage lender foreclose on them? The right decision is taking immediately is not very easy. When a mortgage lender ceases to receive its regularly scheduled mortgage payments, it will file a foreclosure action. There is only on way to stop this from happening and that is pay the mortgage lender. Just like a car being repossessed for non-payment, a mortgage lender can foreclose on a property for non-payment. The rule is same for all and is applicable to any person not paying his mortgage payments will have to forgo his residence through foreclosure.
A legal action filed by somebody who is unable to pay his debts is called as bankruptcy. While the debtor is going through bankruptcy, this step puts an end to anyone engaged in civil proceedings. A mortgage lender must stop all legal actions, including foreclosure proceedings. But, a mortgage company can try for relief from the stay, and when it is allowed, just continue with the action mentioned earlier. 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. The situation is not fixed by declaring bankruptcy, it just slows things 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 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. Bankruptcy can allow a person to not have to make certain payments and, therefore, he might have enough extra money to make payments on his mortgage. 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.
If you do happen to be eligible to declare bankruptcy you will have to pay a fee to your lawyer. It could cost you more in legal fees and costs then it may to catch up your mortgage payments. 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. Because bankruptcy is very complicated, you ought not attempt to do it on your own.
Because this article is just general information you may need to contact an attorney in your state with any questions.
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