Bankruptcy, home foreclosure, and other similar issues can be the cause of serious concern for homeowners. Often times for homeowners, bankruptcy and foreclosure present themselves at the same time, after a Notice of Default has been issued. Usually, homeowners will first attempt to choose among the more desirable options of loan modification, forbearance, partial claim, or deed in lieu; but not all homeowners will be qualified for these alternatives. As a result, homeowners will need to settle with either bankruptcy or foreclosure, two options which are often considered the worst possible.

Since mortgages can differ in all aspects, choosing between bankruptcy or home foreclosure should be considered on a case-by-case basis. By filing a bankruptcy, a homeowner will be given an automatic stay or a repayment plan, depending on the type that is filed. Resulting from the bankruptcy will be significant decline in credit, which can last for as long as 10 years. On the contrary, a foreclosure will completely remove possession of the home, though its negative impact on credit is less than that of bankruptcy. The wise decision for any homeowner forced to choose between these options is to consult with a professional, such as a lawyer or mortgage specialist.