When it comes to foreclosure, some people are not sure whether they should allow that to take place, or just file for bankruptcy. It's important to keep in mind that the decision is not an either/or decision, and as such, cannot be made lightly.

What is Foreclosure?

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. Like repossession, foreclosure will take away a person's home if they do not keep up with the monthly payments they owe on their mortgage.

Can Filing for Bankruptcy Help Then?

For people who cannot pay their debts, sometimes they file the legal action of bankruptcy. The purpose of this action is to stop all the civil action against the debtor while the debtor is in bankruptcy. A foreclosure can be halted through these means because lender is required to cease all their legal actions against the debtor. Lenders respond by filing for relief from this order, and once they are invariably granted such relief, the legal action will continue forward and the house lost.

The bottom line is that bankruptcy does not stop foreclosure and it does not allow a debtor to keep a house without paying the mortgage lender. Bankruptcy will slow the action, but it will not prevent it.

Benefits of Bankruptcy Filing

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.

Also, since bankruptcy can discharge some unsecured debts, a debtor may have more money with which to pay his mortgage payments. Through a chapter 13 bankruptcy filing, the debtor is able to - through a court order - pay their mortgage catch up over a period of time rather than all at once.

Consult Your Bankruptcy Lawyer

What you must realize, of course, is that there are legal fees to pay for bankruptcy, and not everyone is eligible to file for bankruptcy in the first place. Legal bills can be quite high, and high enough that they outweigh the costs of catching up with the mortgage.

It is imperative to talk over bankruptcy with a knowledgeable lawyer if you are going to attempt to stop foreclosure. Bankruptcy is so detailed that you should not try to handle it by yourself.

The material offered in this article should serve only as a general guide, and for more specific information, you should contact a licensed lawyer in your state.