The Bankruptcy vs. Foreclosure Issue
Most people become really messed up between bankruptcy and foreclosure. Most people think that foreclosure is better than bankruptcy while others seem to get the idea that undergoing bankruptcy is a better option than foreclosure. However, whichever way actually have its own benefits and disadvantages. The main reason why most people initially become too concerned when it comes to discussing both things is the fact that it affects credit advantage. If it happens, either of the two can cause a sufficient stain on the credit behavior of the person involved. Unfortunately though, financial constraints can inevitably happen and therefore both of these cannot be avoided.
The first way to go about the battle between bankruptcy and foreclosure is to actually pinpoint which is which anyway. When the term bankruptcy is used, it simply means that the person involved have already ran out of sufficient financial support to sustain a current financial cycle. Usually, personal bankruptcy is being filed by the person himself and declares it in a legal way. This is the option being done when the person still wants to have some form of protection from creditors who may be running after him. The declaration of bankruptcy clothes the person in some form of credit protection but the risk here is that he exposes his financial standing to the public. Should he already be able to bounce back from the financial crisis, he will already have a bankruptcy record to haunt him perhaps on his future dealings.
Meanwhile, foreclosure is often issued on the behalf of the person. Meaning, the creditors are the ones who initiate the process of foreclosure. This is also being characterized as some form of legal action mostly identified among lenders especially those belonging to the mortgage industry. A foreclosure can be issued once a client no longer pays on the initiated date which is usually set on a monthly basis. However, pronouncing a foreclosure does not necessarily mean that the person has already gone bankrupt. There are other factors which may be the reason why payments are not being made as they should have. Still, the risk here is that the client can get a bad credit record among lenders because of a foreclosed property under his name.
In some ways, bankruptcy and foreclosure becomes loosely intertwined with each other. Some people try to stop or even halt the foreclosure process for the time being by issuing or pronouncing a personal bankruptcy for themselves. When they do the latter, lenders might give them some form of consolation to lighten up the burden of their debt. Some people also do this to initiate a process which can become a win-win situation for both them and their lenders. But whichever purpose a bankruptcy becomes intertwined with foreclosure, this matter should not be jumped in without consulting experts.
It is always important to have the input of financial advisors and even lawyers on such a debacle. This increases the chances of still saving face once the whole financial ordeal is over. It would also be good to have some form of financial backup plan should the mix of bankruptcy and foreclosure does not end as planned.