Bankruptcy Option During Foreclosure Process

Advantages and disadvantages of declaring bankruptcy

Going bankrupt is not a pleasant option in most cases, however...

Bankruptcy stops foreclosure sale and can work as a weapon against unfair lenders. However, bankruptcy costs you some money: filing fee, attorney fees, fees for forms, and payment to the clerk of the Federal Bankruptcy Court.

You need to work with a bankruptcy attorney or a paralegal to fill our bankruptcy forms.

Advantages of filing for bankruptcy

Declaring bankruptcy may help you to:

• stop all of your creditors taking action against you
• give you a chance to make a fresh start
• put all of your creditors at equal level in receiving their money
• eliminate some of your debts

Disadvantages of declaring bankruptcy

• Your credit is hurt
• Obtaining a new loan becomes difficult

Which type of bankruptcy?

• Chapter 7: Liquidation
• Chapter 11: Reorganization
• Chapter 13: Debt adjustment
• Chapter 20: Combination Chapter 7 and 13

Don't forget to file homestead exemption!

Note that the Bankruptcy Reform Act of 2005 made the bankruptcy more difficult.

Need help? Review your options to get foreclosure help by professionals (lawyers specializing in foreclosure, foreclosure consultants registered to assist homeowners subject to foreclosure, debt counselors, and real estate agents in California), California state agencies, county agencies in California, consumer advocacy groups, and nonprofit organizations in California.