If you're dealing with a significant amount of debt and are starting to look into the world of debt and debt solution then you likely are getting used to hearing the words "foreclosure" and "bankruptcy." Don't feel stupid if you don't completely comprehend one or both of those words because if you quizzed the average Joseph on the road, chances are he wouldn't be able to give you whole meanings of both words either.
Foreclosure
Foreclosure is the word for a legal motion chased by a mortgage lender after a borrower has failed to make several mortgage payments. Homeowners are mostly notified at least ninety days before the foreclosure that the act will take place. The purpose of foreclosure is for the lender to either recoup the money owed to them or to claim the property that was provided as collateral for the loan.
Bankruptcy
Bankruptcy is similar to foreclosure in that it is also a consequence that comes from not paying your bills. Whereas foreclosure assists the lender, bankruptcy serves the debtor by providing protection from their lenders while the debt is taken care of. In Chapter 7 bankruptcy, the debt is taken care of by liquidating the debtor's nonexempt assets.
In Chapter 13 bankruptcy, the debt is taken care of by repayment with the debtor's income for no more than five years under a restructured repayment program. Any dischargeable debts are absolved at the end of both bankruptcy processes. Bankruptcy and foreclosure are also connected. If you are filing bankruptcy then you can use that bankruptcy to hold off an impending foreclosure. Filing bankruptcy spawns the "automatic stay" which stops all creditors from continuing collection activities. This includes mortgage moneylenders.
So talk to a licensed bankruptcy lawyer in your area about bankruptcy and foreclosure and how they're connected.
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