The secured creditor wants to know everything about one’s rights to satisfy the claims by foreclosure. If you are aimed at the same, then keep reading this article – we will compare bankruptcy and foreclosure. Which situation is more dangerous for you? What is worse for filing for?
Foreclosure is a situation when a homeowner is unable to repay the principal and/or pay interest on the mortgage. Thus, the lender (bank or construction company) can alienate and sell the property in accordance with the procedure provided in the terms of the mortgage agreement. In some cases, in order not to deprive the borrower of the foreclosure, lenders suggest changes to the repayment schedule to allow them to retain ownership of the home. This situation is known as special forbearance or mortgage modification.
Bankruptcy is a lawsuit against an individual or legal entity that cannot pay off outstanding debts in due time. The bankruptcy process begins with the filing of an application by the debtor (the most common practice) or on behalf of the creditors (quite rare). All assets of the debtor are described and evaluated, after which they are used to recover part of the outstanding debt. After the successful completion of the bankruptcy procedure, the debtor is released from debt obligations that arose before the bankruptcy was declared.
Bankruptcy provides an opportunity for individuals and legal entities to start anew by forgiving debts that simply cannot be paid. As a result, lenders get a chance to recover some part of the debt at the expense of proceeds from the sale of the debtor’s assets. In theory, the ability to file for bankruptcy could benefit the economy as a whole by giving debtors another chance and providing creditors with partial compensation for losses.
Filing for bankruptcy in the United States may fall under one of several chapters of the bankruptcy code, such as:
- Chapter 7 (which involves the disposal of the company);
- Chapter 11 (which implies a “reorganization of the company”);
- Chapter 13 (which involves the financial coverage of the debt with lower payments and a new schedule/repayment).
The initiation of the bankruptcy process varies considerably from country to country, resulting in higher or lower filing rates depending on how easily an individual or legal entity can complete the bankruptcy process.
Filing for bankruptcy may not help if you are faced with a foreclosure. The problem is quite tricky, so speak with a foreclosure bankruptcy attorney NYC to get the exact information that suits your situation and where you live. Also, by declaring yourself bankrupt, you become a target for scammers as you are in a desperate situation. Be wary of any unsolicited suggestions that will help you avoid foreclosure and choose carefully who helps you. Start seeking help from consulting agencies and other reputable local agencies. Only in this way, you will be able to find the best solution.