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Tuesday, April 21st, 2009 Subscribe To Our Feed

The Advantages and Disadvantages of Bankruptcy or Foreclosure

The bad economy has put so many people in the position of losing their homes that many are not sure which way would be better foreclosure or bankruptcy. However, it is not as simple as a case of either /or and a decision cannot be made this easily. If monthly mortgage payments are not made, the lender will file a foreclosure. The best way to prevent this action would be to pay the holder or your mortgage. Just like a car being repossessed for non-payment, a mortgage lender can foreclose on a property for non-payment. It will be the same for anyone who has not paid his mortgage, the bank will foreclose on the house.

Bankruptcy is a last resort legal way to get out of paying your debts if you are unable to do so. 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). Even then to get relieve from the automatic stay a mortgage lender can go for legal action and when granted a stay can comfortably proceed with the further action. In short, bankruptcy will not allow a debtor to retain a house without paying his debt to the mortgage lender, and it will not halt the foreclosure process. Bankruptcy only slows down the process and does not eliminate the situation.

Bankruptcy can provide more time and manageable payments to a creditor to possibly avoid foreclosure proceedings. Because of the fact that in a situation of bankruptcy, a mortgage lender will have to suspend a foreclosure action, the debtor has some time to raise the money and pay off. In addition, because bankruptcy may get rid of certain unsecured debts, the debtor might be able to free up funds that he can use to make mortgage payments. Additionally, chapter 13 bankruptcy allows a mortgagee to make payments on the mortgage over a court ordered period of time.

Sadly, not every person will be eligible for bankruptcy, and even if they are found eligible, there are still legal costs. 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 think that bankruptcy might help in stopping or avoiding foreclosure, speak with a licensed advocate. Bankruptcy is complicated enough that you need to hire a lawyer who knows what he or she is doing.

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.

Loan Modification Agreement is arguably the most effective tool you can use if you are behind on your mortgage. Don’t lose your home due to foreclosure when you can take out a Loan Modification that will help you keep your home and reduce your monthly expenses. A Loan Modification Agreement can prevent foreclosure only if you act now before its too late. Click here www.loan-int.com/loan-modification/ for more information..

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