If facing a mortgage lender foreclosure, many people are at a loss as to whether they should allow the foreclosure to take place, or if they should file for bankruptcy. Few people realize how difficult the choice is to make, or recognize that the decision is not an either/or one. To better understand the process, it is necessary to understand that the mortgage lender files a foreclosure action whenever the monthly mortgage payments are not made. 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. Like repossession, foreclosure will take away a person’s home if they do not keep up with the monthly payments they owe on their mortgage.
Bankruptcy is a legal action filed by someone who cannot pay his debts. The purpose of this action is to stop all the civil action against the debtor while the debtor is in bankruptcy. A foreclosure can be halted through these means because lender is required to cease all their legal actions against the debtor. Once they are granted such relief, they will continue with their legal actions against the home buyer. Bankruptcy does not allow you to keep a home that is not paid for to the mortgage lender, and it will not stop foreclosure. 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. 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, the bankruptcy frequently frees up additional funds that no longer have to be paid to other debts so that the buyer can more easily pay their mortgage payments. 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.
What you must realize, of course, is that there are legal fees to pay for bankruptcy, and not everyone is eligible to file for bankruptcy in the first place. As legal fees are known to be very high, a debtor can find themselves in the position of finding their legal bills more expensive than the mortgage they owe. If you think that bankruptcy may help you stop or avoid foreclosure, talk with a licensed lawyer. You will need legal help through your bankruptcy journey, as it is quite complicated by itself. The material offered in this article should serve only as a general guide, and for more specific information, you should contact a licensed lawyer in your state.
