Bankruptcy and foreclosure are similar because it is associated with financial problems. Both of them are legal proceedings that serve different purposes–with different objectives and different results. In other words one is there to help a person out of a financial situation; the other is there as punishment for not paying their monthly payment. Learn the difference between bankruptcy and foreclosure.
The purpose of bankruptcy is to get someone out of debt legally by granting a discharge to them. A person may have to sell their property or come up with a payment plan before the courts can grant a discharge to you. There are other kinds of bankruptcy options but those are the main tow. The goal is to erase debt without losing too much of the things you own in order to do this. Understand that some debt (student loans, child support, alimony, taxes, etc.) will not be erased no matter what kind of bankruptcy you file. With a reaffirmation agreement a person can keep their home and other real estate property. A person will have to face several creditors when trying to get themselves out of debt. The legal proceedings involve federal law. This process is a last resort.
The purpose of foreclosure is to help the mortgage lender or creditor gain control of your home in order to re-coup some of their money lost. The goal is to lose a person’s real estate because the person was behind on their payments. This is only done when there is no other alternative to get their money back without involving the home or other real estate property. A reaffirmation agreement from bankruptcy is one of those alternatives. With foreclosure a person only has to deal with one lender or creditor. The legal proceedings involve state law; each state has their own laws. Like bankruptcy foreclosure is a last resort.
People assume they belong together because it seems the same on the surface. Both are methods to retrieve money and will damage the credit. In a way it intertwines with each other; bankruptcy affects foreclosure because when it’s filed, the mortgage companies cannot proceed with foreclosure proceedings until the automatic stay is over. That can last up to two months. Dig deeper and it really becomes tow different things. They are intertwined but not exactly alike. Foreclosure is as bad as it sounds. Bankruptcy sounds like something negative but it is actually a way out of debt.
Talk to a North Carolina bankruptcy attorney for more information about foreclosure and bankruptcy. They have the experience and expertise to give legal advice. Know your legal options, gather all information required and make sure that the decision made is the right one.