HUD Man | The choice between bankruptcy and a foreclosure is a hard one for many people to make. Having an either/or attitude about the decision may make the choice (already a difficult one) all the harder. A mortgage lender will file a forclosure help action when it is not paid its monthly mortgage payments. You must pay the lender who is filing the action in order to prevent the action from going forward. A mortgage loan is sort of like a car loan and if a person does not pay his car payment, he will lose the car through repossession. If a person does not make their mortgage payments, they face the loss of their home through foreclosure.
Bankruptcy is a legal action filed by someone who cannot pay his debts. The purpose of this action is to stop all the civil action against the debtor while the debtor is in bankruptcy. By law, then, a lender has to hang legal actions including a help with foreclosure. On the other hand, a mortgage lender can get around this by filing for a relief from automatic stay and proceeding with their action once the stay has been approved. Essentially, bankruptcy will not stop foreclosure loan, and will not allow anyone to keep a home without paying the lender. While it cannot stop the action, bankruptcy can slow it down.
While bankruptcy doesn’t stop foreclosure loan, it can give a person extra time to pay the lender, or make it easier to do so. Mortgage lenders are necessary to stop their foreclosure due to bankruptcy, and this gives the person owing money additional time to raise money to pay the lender. Through bankruptcy, many unsecured debts are eliminated completely, and a person who is in debt will frequently find that they have money to pay their mortgage payments with that they didn’t before bankruptcy. 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.
Of course, there is a good chance that a debtor might not actually be able to file for bankruptcy, as eligibility is an issue, and even if they do qualify, there are legal fees that need to be paid. Legal bills can be quite high, and high enough that they outweigh the costs of catching up with the mortgage. If you think that bankruptcy may help you stop or help with foreclosure, talk with a licensed lawyer. You will need legal help through your bankruptcy journey, as it is quite complicated by itself. This article is only intended to give general information, so for more detailed information, contact a lawyer in your state.
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