The Difference Between Bankruptcy and Foreclosure

by | Dec 10, 2018 | Foreclosures Orlando

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Struggling with financial difficulties isn’t an easy thing for people to deal with. They are often left with two choices, bankruptcy or foreclosure. Deciding which choice to make depends on a number of factors including income, living expenses, debts that need servicing, as well as future income growth. Going into foreclosure will only affect the home while a bankruptcy affects all of a person’s debts.  Speaking with an REO agent could be a great way to figure out your options and decide what is best for you and your situation. If you are in the Orlando area going to the Orlando REO Professionals is a great resource that can help you better understand what each option means, including foreclosures Orlando.

 

Foreclosures VS. Bankruptcy According to an REO Agent

If a lender has started foreclosure procedures on your home declaring bankruptcy can allow you to keep your house. Once a bankruptcy is filed a stay order is filed, and foreclosure proceedings are suspended until the bankruptcy has been resolved in court. Bankruptcy can help you keep certain real estate including your house as long as you follow the terms of the agreement determined in court. However, this isn’t always the case. In some cases, the owner will agree to “surrender the home” to the lender so they can sell it to recover the debt that is owed to them. One distinction though is when a person surrenders their home as part of bankruptcy proceedings all mortgage debt is filed as settled. This isn’t the case though in an ordinary foreclosure because if the house is auctioned off and sells for less than the amount owed the owner is still liable for the difference.

 

Thinking about your credit score is another thing that should be considered. A bankruptcy will stay on your credit report for ten years while a foreclosure will remain on your credit report for only seven. Although foreclosures remain on your report for a shorter amount of time credit counselors, believe that it causes a worse impact on a person’s credit score than a bankruptcy that doesn’t include a house.

 

Trying to decide which option is better for you can be a difficult decision. If you want to keep your home filing a chapter 13 bankruptcy may be your best choice. It will allow you to pay off at least part of the mortgage with three to five years, but there is a means test you pass to qualify. A chapter 7 bankruptcy cannot always prevent foreclosure, but it can lessen the amount that you’ll have to pay back. Filing bankruptcy isn’t always an option for everyone. People are eligible for chapter 7 bankruptcy only if they earn less than the median income in their state and have not filed for bankruptcy in the past eight years. When it comes to chapter 13, an individual must prove that they have enough income to meet the repayment obligations.

 

If you are still debating about what the right decision is for you and your situation seeking outside help is your best option. Foreclosures Orlando can be a hard thing to decide, so you need to make sure you have all the information you need.

 

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Orlando REO Professionals are the property experts in the Orlando area. We can provide you the best REO agent to help assist you through your foreclosures Orlando. Call or visit us today to find out how we can help you today!