OSS Advocacy

Some people, when faced with the choice between foreclosure and bankruptcy, are not sure which is the right one to choose. You shouldn’t think in terms of either/or in this situation, and you should realize that this is not a decision which can be made lightly. Monthly mortgage payments must be paid on time every month,or the mortgage lender will file an action of foreclosure. Paying the lender is the only true way this action can be prevented. Understandably, most people do not want to have their car repossessed, so they make their car payments on time every month. Similarly, an individual may lose their home through foreclosure if they do not keep up with the monthly payments on their mortgage.

Bankruptcy is an action which is declared by a person incapable of paying their debts. For the duration of the debtor’s time in bankruptcy, this action stops the civil law actions against the debtor. As a result, the mortgage lender is incapable of immediately continuing their foreclosure, or any other legal action. Lenders respond by filing for relief from this order, and once they are invariably granted such relief, the legal action will continue forward and the house lost. Foreclosure will go forward, despite filing for bankruptcy, and you cannot keep a home unless you pay the lender. The best bankruptcy can do is slow down the process, but it cannot stop it entirely.

While bankruptcy does not stop foreclosure, it can give a person time to pay a mortgage lender or make it easier for a person to pay a mortgage lender. Due to bankruptcy, mortgage lenders are required to stop their foreclosure action, and this gives a debtor extra time to raise the funds necessary to pay the lender. Since the act of filing bankruptcy can get rid of many unsecured debts completely, a person who is in debt may find themselves with more money that they can pay their mortgage payments with. In terms of a chapter 13 bankruptcy, the courts will dictate that the payment of the overdue mortgage needs to be paid through several payments, which will further give the debtor time to pay the lender off.

However, not everyone qualifies for filing of bankruptcy in the first place, and those that do must pay sufficient legal fees. Legal costs and fees might actually end up being more than the amount needed to catch up on the past due mortgage payments. In terms of both a foreclosure and a bankruptcy, you will want to discuss your options with a lawyer first. Due to the complicated legal procedures involved in bankruptcy, it is definitely a procedure that you should not handle by yourself. This article is general information so if you have any questions of any nature about this subject then you need to talk with a lawyer licensed in your state.