The bad economy has put so many people in the position of losing their homes that many are not sure which way would be better foreclosure or bankruptcy. Decision-making is not just a matter of yes or no, it is not that simple. When a mortgage lender ceases to receive its regularly scheduled mortgage payments, it will file a foreclosure action. The only way to stop this from occurring is to 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.
When someone no longer has the financial means to pay their debts bankruptcy is the legal action that they may take. This actions brings to a stop every civil proceeding involving the debtor during the period of his bankruptcy. At this point the lender has to stop all planned actions including a planned foreclosure action. 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. In short, bankruptcy will not allow a debtor to retain a house without paying his debt to the mortgage lender, and it will not halt the foreclosure process. Bankruptcy may make your financial problems easier to handle, but it will not make them completely go away.
While bankruptcy does not stop foreclosure, it can give a person time to pay a mortgage lender or make it easier for a person to pay a mortgage lender. The debtor and a short time in which to come up with the needed funds, because the lender must suspend foreclosure when the debtor has filed for bankruptcy. 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. In addition, chapter 13 bankruptcy is a fee schedule that is court-ordered, and lets the debtor make payments on his mortgage to get up to date on his balance across a time frame.
If you qualify for bankruptcy, which you may not, there are still legal fees to pay. It could cost you more in legal fees and costs then it may to catch up your mortgage payments. Talk with a licensed lawyer that specializes in bankruptcy to determine if bankruptcy can really help you avoid foreclosure. 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.
Anthony Dean has helped many home owners with the loan modification process. See how he can help with your loss mitigation here.WeSaveHomes