It is not always easy to choose between bankruptcy or allowing a foreclosure. 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 foreclosure action when it is not paid its monthly mortgage payments. The only way to stop this is to pay the mortgage lender.
Another type of loan, a car loan, will result in the loss of your car through repossession if you are not diligent in paying your loan. Similarly, an individual may lose their home through foreclosure if they do not keep up with the monthly payments on their mortgage.
For someone who cannot pay his or her debts, bankruptcy is a legal action they can take. The purpose of this action is to stop all the civil action against the debtor while the debtor is in bankruptcy. As a result, the mortgage lender is incapable of immediately continuing their foreclosure, or any other legal action. Still, the mortgage lender will respond by filing for relief from the stay, and once they are granted relief, the proceedings will continue. When it comes down to it, filing for bankruptcy will not prevent a foreclosure, nor will you be able to keep the home if you do not pay the mortgage lender. The best bankruptcy can do is slow down the process, but it cannot stop it entirely.
Paying the lender is sometimes made easier through bankruptcy, as it can give a buyer extra time to make the payments, or make it easier to make payments, thereby stopping a foreclosure. As bankruptcy makes a mortgage lender temporarily cease a foreclosure action, a debtor has additional time to raise 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. Through a chapter 13 bankruptcy filing, the debtor is able to - through a court order - pay their mortgage catch up over a period of time rather than all at once.
Legal fees accompany anyone who does indeed find themselves eligible for bankruptcy, which isn't everyone. For some, they may find that the exorbitant fees they are asked to pay are even higher than the payments they were behind on. In terms of both a foreclosure and a bankruptcy, you will want to discuss your options with a lawyer first.
Bankruptcy is so detailed that you should not try to handle it by yourself. The scope of this article is to give you basic information, and if you are wanting more detailed information, you need to speak to a lawyer who is actually licensed in your home region.