Bankruptcy - a means to avoid foreclosure.

Bankruptcy is the last option to choose to avoid foreclosure. If no other options help you to avoid foreclosure, then you can opt for bankruptcy. But you cannot just file bankruptcy on your own. You can file bankruptcy only if you pass the eligibility criteria. You can take help of an attorney to file the bankruptcy. There are two different kinds of bankruptcy - Chapter-7 and chapter-13. So the attorney can also help you to choose which chapter is appropriate for you to file.

Bankruptcy chapter7

If you file Bankruptcy chapter7 then all your non-exempt properties will be sold to pay your creditors. Chapter7 hurts your credit report heavily but the lenders cannot come after you for the deficiency judgment. If you file chapter7 then your credit score will be doped by 250 to 300 points. Also you may not get approved for mortgage for 5 to 7 years after filing bankruptcy chapter7.

Bankruptcy chapter13

If you can file bankruptcy chapter13 then the lenders cannot foreclose or harass you. You can be able to pay your lender with an easy repayment plan with an affordable rates and terms. It does not affect your credit as much as the bankruptcy Chapter7. It will drop your credit score by 100 to 150 points and you may be able to get approved for a new mortgage within one year after you file bankruptcy chapter13. But the best thing is that you can keep your dream home as your are filing chapter13.