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Bankruptcy Vs Foreclosure

Bankruptcy Vs Foreclosure

: Richard West Law Office

foreclosureAnyone that has a home with missed mortgage payments or the threat of foreclosure faces some tough decisions ahead. While letting the home continue into foreclosure isn’t a choice option, some people do choose it over bankruptcy for fear of the credit consequences. Unfortunately, this is usually the worst way to go.

Credit Consequences

When you file for Dayton bankruptcy you have a chance at resolving your debt problems and keeping your home. While it is true that a bankruptcy will remain on your credit report for up to 10 years, there is no direct damage done to your credit score. In fact, once debts are resolved in a bankruptcy most people find their score actually increases. Further, getting new credit in the future isn’t near the challenge you would expect when the debts are resolved through a Chapter 13 bankruptcy. This isn’t the case in a foreclosure.

When you allow the home to complete a foreclosure you may be released from liability over the debt, but you will do so at the cost of losing the home. Further, the debt will be reflected as a foreclosure on your credit report. The mark of a foreclosure often has the worst impact on your credit score because the debt was not resolved in good standing. Yes the debt obligation is considered satisfied, but future lenders look harshly on debts resolved in this way compared to debts resolved through a system like Chapter 13 bankruptcy.