What are the pros and cons of choosing bankruptcy over foreclosure?

Foreclosure is the legal process your mortgage lender or county starts to take your home. This means that once the bankruptcy process is completed, the lender or county can takes your home and tries to recoup the money lost by selling the property. There’s a variety of things you can do to try to stop or avoid the foreclosure process such as speaking to your lender‘s foreclosure loss mitigation department. Bankruptcy is another option.

One pro of filing a chapter 13 bankruptcy petition is an automatic stay. The stay halts the foreclosure process even if the house has been foreclosed on, but not sold. The automatic stay remains active throughout the bankruptcy case.

Another good thing about bankruptcy is that you are allowed to pay back the money you owe over a three to five year period. Thus, this can eliminate the reason for the foreclosure. Under a repayment plan, you pay a set amount a bankruptcy trustee. The trustee then send the money to your creditors.

However, chapter 13 requires you to keep your mortgage payments current and make the payments to the bankruptcy trustee. This requirement can be a con if you don’t have the money to pay the bankruptcy trustee and lender. Another con is that you be eligible to file chapter 13. Although there are pros and cons of choosing bankruptcy of foreclosure, bankruptcy may be the option you choose. So talk with bankruptcy lawyer who can assist you. The lawyer will determine if you’re eligible and file the bankruptcy petition on your behalf.