Foreclosure or Bankruptcy

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Foreclosure or Bankruptcy

One must decide whether or not to choose bankruptcy or foreclosure. It cannot be presumed to be a simple case of either/or as a verdict is not possible and cannot be made this easily. If monthly mortgage payments are not made, the lender will file a foreclosure. The only way to stop this from occurring is to pay the mortgage lender. Just like a car being repossessed for non-payment, a mortgage lender can foreclose on a property for non-payment. So, this is identical to what will occur if someone fails to pay their mortgage - foreclosure will take their home from them.

A legal action filed by somebody who is unable to pay his debts is called as bankruptcy. This actions brings to a stop every civil proceeding involving the debtor during the period of his bankruptcy. So, by law, a mortgage lender has to suspend all legal actions including a foreclosure action. But, a mortgage company can try for relief from the stay, and when it is allowed, just continue with the action mentioned earlier. The truth is bankruptcy does not stop foreclosure nor does it allow you to keep your house with out paying the mortgage lender. Bankruptcy only slows down the process and does not eliminate the situation.

Although filing bankruptcy can’t stop foreclosure, it provides an individual with additional time to repay a mortgage lender or facilitates paying the lender of the mortgage. 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.

Not everyone qualifies for bankruptcy and Unfortunately if they do qualify, there are legal fees to pay. The amount of money you need to get your mortgage payment current may be nothing compared to the legal fees you will have to pay. 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. Bankruptcy is a complex process and one that should be handled by yourself.

We have reproduced the general information in this article and if you have any queries of any sorts on this subject be sure to consult with a advocate licensed in your state.

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