Bankruptcy v. Foreclosure

The lenient lending that took over the home mortgage industry has lead many people to have to make some tough decisions with the toughest one being deciding between Chapter 13 bankruptcy and foreclosure. While these two options are not ideal for many people, it is a choice that must be made, but having the facts beforehand can definitely help the decision.

Once a mortgage payment becomes so far behind, the bank is forced with no option but to foreclose on the home. Instead of letting foreclosure happen, some are choosing to file Chapter 13 bankruptcy instead which will allow them to list the debt that is owed on their home as well as other debts on a petition. Some may think that filing bankruptcy is the worst option, but the truth is that by filing Chapter 13 bankruptcy this can allow the person to hold on to their home under the circumstances that they have the cash to pay their mortgage payment each month plus some.

A little research in Chapter 13 may cause some to feel that this is the ideal solution to not losing their home. However, before jumping into filing Chapter 13, it is ideal that the person take a minute to look at their cash income and then figure out if they will have the cash to pay their mortgage payment at a higher rate. Another factor that needs to be considered is the effect that Chapter 13 will have on ones credit and also the effect that foreclosure would have on ones credit.

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