Sometimes people have to choose between filing bankruptcy or letting their mortgage lender foreclose on their property. Decision-making is not just a matter of yes or no, it is not that simple. A mortgage lender will file a foreclosure action when the homeowner has not paid his monthly mortgage payments. The best way to prevent this action would be to pay the holder of your mortgage. A mortgage loan can be compared to a car loan which if not paid back on time, the car could be repossessed. The same goes for anyone who has not paid his mortgage, the bank will foreclose on the house.
This actions brings to a stop every civil proceeding involving the debtor during the period of his bankruptcy. So, by law, a mortgage lender has to suspend all legal actions including a foreclosure action. However, a mortgage lender can file for relief from the automatic stay, and when the relief is granted, simply proceed with the aforementioned action. In short, bankruptcy will not allow a debtor to retain a house without paying his debt to the mortgage lender, and it will not halt the foreclosure process. Going into bankruptcy does not solve the problem; it only makes the process proceed more slowly.
Bankruptcy can help give a person the needed time, and sometimes make it easier to pay their mortgage lender. It will not, however, stop foreclosure should they still not be able to pay. Because of the fact that in a situation of bankruptcy, a mortgage lender will have to suspend a foreclosure action, the debtor has some time to raise the money and catch up. Discharging unsecured debts through bankruptcy may enable you to have more money to pay the mortgage payments.
The last resort for any debtor who is unable to keep up his repayment schedule at the prevailing circumstances, is to declare insolvency or bankruptcy to avoid further consequences. Under such circumstances, the court, based on the details submitted by the creditor and debtor, may permit the debtor to repay the loan over a period of time by designated installments under Chapter 13 of the bankruptcy law.
Sadly, not every person will be eligible for bankruptcy, and even if they are found eligible, there are still legal costs that will need to be paid. The legal costs and fees may be more than the amount needed to catch up and make current mortgage payments. If you are thinking that declaring bankruptcy may benefit your situation and help you get out of a foreclosure, a good lawyer should be able to answer your questions. Bankruptcy is so detailed that you should not try to handle it by yourself.