The advantage of declaring bankruptcy is that it can be done at the last minute just before the home is actually auctioned off by the lender. Once the bankruptcy is declared, the auction is stopped or nullified until the lender stay lifted.

The disadvantage of declaring bankruptcy is that the vast majority of homeowners that declare bankruptcy to stop a foreclosure end up getting a bankruptcy AND a foreclosure on their credit. This is because a bankruptcy only DELAYS the foreclosure, but does not ultimately prevent it from happening in another month or two. Also, fees and missed payments pile up during bankruptcy making foreclosure more likely and less preventable.

If a homeowner’s financial problems can be mostly resolved by selling their home, a short sale or other options for the seller are much better than a bankruptcy

Unfortunately – a bankruptcy attorney will rarely tell clients this! Most homeowners that consult only a bankruptcy attorney when looking for solutions to avoid foreclosure will end up concluding they have only one option – declaring bankruptcy and getting a foreclosure even though both might have been avoided.

Bankruptcy is a big decision. Before (or in conjunction with) exploring this option, make sure you talk to a creative real estate investing professional about all of your options! Regardless of your situation, income, or equity, if you would like to discuss all of your options for selling your home quickly to avoid foreclosure, please contact us.