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A foreclosure reflects in the balance sheet for seven years while bankruptcy reflects for ten years. But this does not mean that foreclosure is a better option. It is best for a person to avoid both these situations. If one is facing issues of payment and debts are lying pending for two to three months, it is better to approach the lenders and try and convince them about a different payment schedule and plan.
Both bankruptcy and foreclosure are derogatory terms and how much they affect an individual depends on the individual’s credit.
However, it is not shameful to file a Chapter 13 bankruptcy. It shows that you are responsible for your debts and you will do whatever it takes to repay them. Another negative aspect of bankruptcy is that it causes a drop in the person’s credit score. In comparison, when someone is facing foreclosure, their credit score is already very low. In reality, bankruptcy could improve a foreclosure victim’s credit, or at least speed up the recovery process. Bankruptcy is also considered as an option to stop foreclosure. Debtors can make use of bankruptcy to keep their basic property such as house with them, but in the end the best option would be to discuss the situation with an attorney and take his advice as he would suggest what is better for the debtor in his current situation.
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