If you are struggling to keep up with your mortgage repayment obligations in Coral Springs, it is important that you consider the options that you have at your disposal. If you fail to make mortgage repayments on time, your situation could deteriorate very quickly, and you may be subject to foreclosure as a result.
Bankruptcy and foreclosure are two common outcomes of missed mortgage repayments, but they are very different, and they both carry their own pros and cons. This is why it is wise to understand how these options compare before deciding what course of action to take.
What is bankruptcy?
Bankruptcy is a process of liquidating assets and providing debt relief to individuals who cannot repay their debts. It tends to be initiated by the individual debtor, and it can be a lengthy process depending on the bankruptcy Chapter that is filed for. It offers the debtor the chance to get a fresh start and to be free of their debts.
What is foreclosure?
Foreclosure occurs when a creditor takes possession of a property when the debtor is not meeting their repayment obligations. This essentially leads to the debtor losing their home.
Is bankruptcy always a better option than foreclosure?
Filing for bankruptcy has many advantages in comparison to going through foreclosure. Bankruptcy is, in most cases, voluntary, whereas foreclosure is initiated by the creditor. Therefore, bankruptcy is an act of taking control of your finances. Bankruptcy also addresses the entirety of your debts rather than only your mortgage, meaning that you can eventually gain a financial fresh start.
However, bankruptcy is not always the preferable option. Filing for bankruptcy can have the potential to have a greater impact on your credit score, with bankruptcy remaining on your report for 10 years, and foreclosure remaining on your credit score for seven years. Bankruptcy can also be an extremely taxing process that can last several months or years.
Can bankruptcy help me to avoid foreclosure?
If you are at risk of being subject to foreclosure, filing for bankruptcy may be able to help you avoid this outcome.
If you foresee problems in affording your mortgage repayments, taking early action to file for bankruptcy may help you avoid losing your home.