Should You File Bankruptcy Before Foreclosure or After?

This question is often asked by those facing foreclosure. Many people wonder if filing bankruptcy can help them keep their home and avoid foreclosure. Others who already know they will have to file bankruptcy regardless, wonder if it is best to file before or after the foreclosure process. In the end, it is highly recommended that you seek a bankruptcy attorney and allow the attorney to walk you through what the best options are for you and your unique situation. In regards to bankruptcy, there is never an answer that covers every situation; instead, attorneys can help walk you through your debts and determine if bankruptcy is right for you.

Although this article will not advise you on whether to file bankruptcy before or after foreclosure, it will provide some general information in regards to bankruptcy and its effects on the foreclosure process. Note that bankruptcy stays on your record for ten years and therefore should never be taken lightly. Furthermore, if you are trying to file bankruptcy before foreclosure in an effort to stop foreclosure it will not work if you file Chapter 7 bankruptcy (the most common type). More often than not, filing bankruptcy will only delay the foreclosure process but will not stop the foreclosure in the end. Regardless of whether you plan to file bankruptcy or not, an agreement has to be made with the lending company to stop the foreclosure process.

It is also important to understand that filing bankruptcy puts your fate in the hands of another instead of allowing you to maintain control. Furthermore, filing bankruptcy before a foreclosure does not guarantee that an agreement will be reached with the lending company to make up for outstanding debt; therefore, you may not only experience foreclosure but also have a ten year bankruptcy added to your existing issues. One possible exception is with Chapter 13 bankruptcy, which allows you to reorganize your debt and pay it off. You could keep your home in this scenario if you qualify.

In the end, it is recommended that you see a bankruptcy attorney to determine your options based upon your specific situation before making a decision.