Wednesday, November 6, 2013
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BANKRUPTCY VS FORECLOSURE
Whether a person should file for a bankruptcy due to non payments of the debts or foreclosure will be a suitable option, does not depend on the personal choice of a person. The decision varies according to the situation.
Suppose a person is suffering from financial crunch and because of that the person is unable to pay the mortgage lender the outstanding monthly payments, then the mortgage lender is going to file for foreclosure. To get relief from the foreclosure proceedings the person must pay back the monthly dues to the mortgage lender.
Whereas, bankruptcy is a process which is filed by a borrower due to non payment of the debts. After filing bankruptcy the mortgage lender is restricted from taking any kind of legal action against the debtor. When a bankruptcy is filled it provides an automatic stay on the assets of the borrower which stops a lender from any legal proceedings. But the creditor can file for release from the automatic stay. And once it is granted, the mortgage lender can choose for foreclosure. So it is understood that bankruptcy slows down the foreclosure procedure. But it cannot stop foreclosure. Bankruptcy only provides some time to the debtors so that the debtor can make repayment plan and start paying off the outstanding. And in some cases eliminates certain debts from the account of the debtors.
BANKRUPTCY VS FORECLOSURE
Whether a person should file for a bankruptcy due to non payments of the debts or foreclosure will be a suitable option, does not depend on the personal choice of a person. The decision varies according to the situation.Suppose a person is suffering from financial crunch and because of that the person is unable to pay the mortgage lender the outstanding monthly payments, then the mortgage lender is going to file for foreclosure. To get relief from the foreclosure proceedings the person must pay back the monthly dues to the mortgage lender.
Whereas, bankruptcy is a process which is filed by a borrower due to non payment of the debts. After filing bankruptcy the mortgage lender is restricted from taking any kind of legal action against the debtor. When a bankruptcy is filled it provides an automatic stay on the assets of the borrower which stops a lender from any legal proceedings. But the creditor can file for release from the automatic stay. And once it is granted, the mortgage lender can choose for foreclosure. So it is understood that bankruptcy slows down the foreclosure procedure. But it cannot stop foreclosure. Bankruptcy only provides some time to the debtors so that the debtor can make repayment plan and start paying off the outstanding. And in some cases eliminates certain debts from the account of the debtors.