Foreclosure or File Bankruptcy

Foreclosure or File Bankruptcy

Based on our mail, the financial squeeze that’s left millions of Americans falling behind on their mortgage payments doesn’t seem to be letting up. For some, that presents a stark choice: is it better to lose your house to foreclosure or file bankruptcy?

What is better on your credit report – Foreclosure or File Bankruptcy?

— D.F., Address withheld

Neither option is going to be easy. Generally, a foreclosure will remain on your credit report for 7 years, while a bankruptcy remains for 10 years. But that doesn’t mean foreclosure is necessarily the better option, according to Ray Hooper, Education and Housing Director for the Consumer Credit Counseling Service of Greater Dallas, a non-profit agency that tries to help people facing foreclosure keep their homes.

“A foreclosure is very serious to mortgage lenders,” said Hooper. “They’re going look at a foreclosure more seriously than they will a bankruptcy that doesn’t include the house.”

Before you accept that foreclosure is a foregone conclusion, consider trying to avoid it. If you’re having trouble making payments, or even behind by a month or two, contact your lender before the process goes any further. Even if you’ve gotten an official “notice of default,” saying you’re several months behind, you still have time before the formal foreclosure process begins.

The first question you need to decide is whether you want to keep your house or give it up. If you want to keep it, you need to try to work out a plan to get back on track. This involves either making up for the missed payments – which you can do all at once or try to spread out – or coming up with a new plan. One option is to have the loan modified – at a lower interest rate, for example. Or you can ask for “forbearance,” which basically means the lender suspends payments until you can get back on your feet. If you’re in over your head and bought too much house, though, these options probably aren’t going to help.

For help in filing for Foreclosure or File Bankruptcy, or assistance with other business matters;
Call Bankruptcy and Business Attorney C. Stephen Gurdin at his Wilkes-Barre Office, (570) 826-0481.

Attorney C. Stephen Gurdin Jr. Wilkes-Barre Bankruptcy, Business Law, and Estate Planning Law Firm

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Attorney C. Stephen Gurdin Jr. Bankruptcy Law

67 – 69 Public Square, Suite 501
Wilkes-Barre, PA 18701

570.826.0481 | Telephone


By John W. SchoenSenior producer – Foreclosure or File Bankruptcy

updated 10/29/2007 10:19:48 AM ET