If you are dealing with a significant amount of debt and are starting to look into the world of debt and debt result 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 Joe on the road, chances are he wouldn't be able to give you full definitions of both words either.
Foreclosure
Foreclosure is the term for a legal motion pursued by a mortgage lender after a borrower has failed to make several mortgage payments. Homeowners are mostly notified at least 90 days before the foreclosure that the act will happen. The purpose of foreclosure is for the lender to either recoup the cash owed to them or to claim the property that was provided as collateral for the loan.
Bankruptcy
Bankruptcy is similar to foreclosure in that tis also a result that comes from not paying your bills. Whereas foreclosure serves the lender, bankruptcy assists 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 belongings.
In Chapter 13 bankruptcy, the debt is taken care of by repayment with the debtor's salary 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're filing bankruptcy then you can use that bankruptcy to hold off an approaching foreclosure. Filing bankruptcy spawns the "automatic stay" which prevents all creditors from continuing collection activities. This includes mortgage moneylenders.
So speak to a licensed bankruptcy attorney in your region about bankruptcy and foreclosure and how they're connected.
