Bankruptcy and foreclosure are two very different legal processes. In almost every case, a bankruptcy is preferable to a foreclosure. Bankruptcy can also be a way to help avoid foreclosure so you do not experience the forced sale of your home.
An experienced bankruptcy lawyer at the Law Office of Ronald D. Weiss, P.C. can help you to understand your options when you are facing foreclosure and can assist you in determining if bankruptcy would be helpful in your situation. Call today to speak with a member of our legal team to learn more.
Bankruptcy vs. Foreclosure
When you stop making mortgage payments, a lender can foreclose on your home. The foreclosure is going to damage your credit and will remain on your credit report for as long as 10 years. If your home sells for less than the balance you owe to the mortgage lender, you could also end up with a deficiency judgment against you. This means the lender would get a judgment for the balance due and you could be forced to keep making payments for years on a home that has been foreclosed on.
Bankruptcy, on the other hand, can help stop foreclosure and can protect your financial future. When you file for bankruptcy, an automatic stay goes immediately into effect to prevent your mortgage lender from continuing with foreclosure proceedings. You then have time to negotiate with the mortgage lender to consider better alternatives to foreclosure like deed in lieu of foreclosure or a short sale.
Deed in lieu of foreclosure means you give the lender the keys, the lender doesn’t foreclose and you can negotiate to avoid a deficiency judgment. A short sale means you sell the house for less than the outstanding mortgage balance and the lender agrees to accept that money and not pursue a deficiency judgment.
In some cases, bankruptcy could also give you time to negotiate a mortgage modification or to get current on your mortgage so that you can keep your house. Chapter 13 debtors may even be able to eliminate second mortgage debt if they owe more than the home is worth.
Bankruptcy can be helpful in a number of ways when facing the loss of your home, and can also allow you to deal with other debt problems as well. You should speak with an experienced bankruptcy lawyer as soon as you begin experiencing financial problems or as soon as you suspect you will fall behind on your mortgage.
The Law Office of Ronald D. Weiss, P.C. is here to help if you are facing foreclosure. Call today to speak with a member of our legal team.