Foreclosure vs Bankruptcy
Should you be in the position where you have to choose foreclosure vs bankruptcy which should you go for? The foreclosure process is a legal procedure where a lender ends the borrowers interest in the property once the mortgagor fails to make their payments. Foreclosing lenders will then takes possession of or alternatively sell the property. Foreclosure does not happen overnight. It won’t begin until ther point where you have missed several payments, usually three or four. This allows you time to consider your options such as loan forbearance or a short sale. Also as you may already be aware bankruptcy is when someone is unable to pay or is legally discharged from paying one’s debts. In other words they have been declared by law to be unable to meet their liabilities. Now here is the difference between foreclosure vs bankruptcy, or the advantages of a bankruptcy to stop foreclosures.
Avoid or alternatively delay foreclosure of your home by attaining bankruptcy protection. If you are staring down the barrel of foreclosure, bankruptcy may help you. A lot of the time, filing Chapter 7 bankruptcy delays the foreclosure by a period of a number of months. Some folks could be able to save their home by filing for what’s known as Chapter 13 bankruptcy. When you filing a Chapter 13 or Chapter 7 bankruptcy, the court will automatically issue an order (known as Order for Relief) which includes a handy thing often referred to as the “automatic stay.” The automatic stay makes your creditors stop their collection activities immediately. No excuses! Should you home be scheduled for a foreclosure sale, the sale will be postponed legally whilst pending bankruptcy, usually for three to four months.
Chapter 13 bankruptcy lets you pay off the late or uncollected payments over the length of a repayment plan you propose. This can be up to around five years in some cases. But you’ll need enough income to at least meet your current mortgage payment at the same time as paying off the arrears. Assuming you make all the required payments up to the end of the repayment plan, you will avoid foreclosure and keep your home. If your interest on the Chapter 13, try to get more information with a bankruptcy attorney because it may also help you eliminate the payments on your second or third mortgage.
A further option may be to renegotiate your current loan. You may have bought your house when interest rates were high and your repayments may reflect this. You can try to refinance your loan at a lower interest rate in order to solve your cash flow problems. Obtain quotes from different lenders in order to receive the best interest rate on refinancing. Another option to avoid foreclosure is to simply sell your house yourself. Your debts may have become too large to handle and a house sales could eliminate them and stop a bad credit record due to foreclosure. You may not get your ideal price if you are trying for a quick sale, but it is a more financially sound option than foreclosure. Hopefully with this information learned the basic difference between foreclosure vs bankruptcy and get to make the best decision.
