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Difference between Bankruptcy and Foreclosure

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 m

What's the Difference between Bankruptcy and Foreclosure?

Some individuals ponder the decision to file bankruptcy or simply allow the mortgage lender to start 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. There is only on way to stop this from happening and that is pay the mortgage lender. Mortgage loans are just like car loans, if you do not make payments you will lose it. The rule is same for all and is applicable to any person not paying his mortgage payments will have to forgo his residence through foreclosure.

Bankruptcy is a legal action filed by someone who cannot pay his debts. While the debtor is going through bankruptcy, this step puts an end to anyone engaged in civil proceedings. Therefore, according to law, the mortgage lender must stop all legal action (including foreclosure). But, a mortgage company can try for relief from the stay, and when it is allowed, just continue with the action mentioned earlier. The bottom line is that bankruptcy does not stop foreclosure and it does not allow a debtor to keep a house without paying the mortgage lender. Bankruptcy does not eradicate the situation; it merely slows the process down.

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. 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. The legal costs and fees may be more than the amount needed to catch up and make current mortgage payments. If you are of the opinion that filing bankruptcy might let you prevent or stop a foreclosure proceeding, discuss it with a licensed legal professional. Bankruptcy is a complex process that is best handled by professionals.

The article is composed of generalized info, so if there are any queries of any type in regards to this subject you need to consult with an attorney licensed in your state.

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