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If I Go Into Foreclosure Do I Need To File For Bankruptcy
Some people, when faced with the choice between foreclosure and bankruptcy, are not sure which is the right one to choose. Few people realize how difficult the choice is to make, or recognize that the decision is not an either/or one.
The reason a foreclosure occurs is because a mortgage lender isn't paid their monthly mortgage payments. Stopping the action can only be done by paying the lender. A mortgage loan is sort of like a car loan and if a person does not pay his car payment, he will lose the car through repossession. Therefore the same result will apply to a person who does not pay his mortgage payments - he will lose his home through foreclosure!
If a person's debt is so bad that they cannot pay their debts, then they sometimes must file bankruptcy. This action stops all civil proceedings 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.
Once they are granted such relief, they will continue with their legal actions against the home buyer. In other words, no, bankruptcy will not stop foreclosure - the only way to do this is to make payments to your lender. The only thing that bankruptcy can do is slow down the inevitable process.
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. Bankruptcy makes a mortgage lender pause in their foreclosure efforts, and a debtor has a little extra time to raise the money. 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.
Of course, there is a good chance that a debtor might not actually be able to file for bankruptcy, as eligibility is an issue, and even if they do qualify, there are legal fees that need to be paid. For some, they may find that the exorbitant fees they are asked to pay are even higher than the payments they were behind on. Anyone considering bankruptcy to prevent foreclosure should discuss it with a lawyer. Bankruptcy is a complicated legal process that should not be handled by yourself alone. 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.
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