Bankrupcy Legal Advice 

If facing a mortgage lender foreclosure, many people are at a loss as to whether they should allow the foreclosure to take place, or if they should file for bankruptcy. You shouldn't think in terms of either/or in this situation, and you should realize that this is not a decision which can be made lightly. An act of foreclosure can occur when the mortgage lender does not receive the monthly payments they are entitled to. The only way to stop this from occurring is to pay the mortgage lender. These types of loans are like car loans, in which you would lose your car through repossession if you didn't pay your bills. Therefore the same result will apply to a person who does not pay his mortgage payments - he will lose his home through foreclosure!

For people who cannot pay their debts, sometimes they file the legal action of bankruptcy. Bankruptcy protects the filer by stopping all civil proceedings against them during the time the debtor is in bankruptcy. This means that the mortgage lender cannot continue through with their legal actions, including a foreclosure. On the other hand, a mortgage lender can get around this by filing for a relief from automatic stay and proceeding with their action once the stay has been granted. Foreclosure will go forward, despite filing for bankruptcy, and you cannot keep a home unless you pay the lender. The only thing that bankruptcy can do is slow down the inevitable process.

Even though it doesn't stop foreclosure, bankruptcy can also be beneficial in that it will allow a person additional time to make payments, or make it easier to pay the lender. Bankruptcy makes a mortgage lender pause in their foreclosure efforts, and a debtor has a little extra time to raise the money. Since the act of filing bankruptcy can get rid of many unsecured debts completely, a person who is in debt may find themselves with more money that they can pay their mortgage payments with. A chapter 13 bankruptcy allows the debtor to pay the mortgage over a period of time through a court ordered payment plan.

Of course, there is a good chance that a debtor might not actually be able to file for bankruptcy, as eligibility is an issue, and even if they do qualify, there are legal fees that 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 think that bankruptcy may help you stop or avoid foreclosure, talk with a licensed lawyer. Bankruptcy is so detailed that you should not try to handle it by yourself. This article is only intended to give general information, so for more detailed information, contact a lawyer in your state.