Which Is Better- Foreclosure or Bankruptcy?
If you fall behind on payments, your lender will not hesitate to take away your home. And the inevitable outcome of your missed payment is foreclosure. You will have no other option but to walk away from your house. You face foreclosure when you fail to make mortgage payments to your lenders. And you file bankruptcy when you are deep in debt and you are unable to derive benefits from the other debt relief options other than bankruptcy.
Bankruptcy will defer foreclosure
Whether it is foreclosure or filing bankruptcy neither of them have a positive impact on your credit score. The only advantage of filing bankruptcy is automatic stay that delays the foreclosure process. The foreclosure process can be delayed till the time the lender doesn’t file for relief from the automatic stay. In case the lender files for relief from automatic stay and the same is approved, the lender will proceed with the foreclosure process. So, you can save your house only if you pay back your mortgage dues to the lender. If you fail to do so, you will lose your home. So, filling bankruptcy will only defer the foreclosure process as it requires any kind of legal action to be suspended against you.
Bankruptcy gives you an opportunity to catch up with mortgage payments
Filing bankruptcy will give you some time to catch up with the mortgage payments. If you are filing Chapter 13 bankruptcy, you get a repayment plan that allows you to make mortgage payments in a systematic and organized manner.
When you file bankruptcy, there are many debts that are discharged. So, you can use some cash to make mortgage payments if you have sufficient cash with you. So, this is another way you can catch up with your monthly mortgage payments.
Foreclosure, bankruptcy and your credit score
Whether you file bankruptcy or face foreclosure, both impact your credit score in a negative manner. If you file bankruptcy, it gets recorded in the credit report for a period of 7 to 10 years. On the other hand, if you are facing foreclosure, the same gets recorded in your credit report for a period of 7 years.
So, if you are planning to take out a mortgage after filing bankruptcy or after foreclosure, getting fresh credit on favorable terms is a distant possibility.
However, the foreclosure process can be delayed by bankruptcy provided you are eligible to file the same. And after the new federal bankruptcy laws have been introduced in October 2005, filing bankruptcy has become even more difficult.
Recommended sites:
Tulsa Ok Foreclosures tools – Tulsa Ok Foreclosures is your one stop resource for foreclosure information in Tulsa Oklahoma. Find foreclosure sales, browse article and secure mortgage funding all in one place and free of charge.
How to find an Aventura Realtor – One of the internet sites that offers a complete set of tools to explore South Florida Real Estate, including Sunny Isles Condos and Homes, Hallandale real estate, Miami Beach real estate. You can have a complete access to MLS searches ranging from South Florida short sales and foreclosures listings to Florida Condo buildings searches, Florida luxury homes search, and much more.
Filing bankruptcy – Filing Bankruptcy Information: Chapter 7 & 13 bankruptcy facts. Free bankruptcy evaluation by a local bankruptcy attorney.
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