Foreclosure and bankruptcy are terms which are being bandied about and also used quite frequently nowadays. These are tough economic conditions and when people had taken huge loans to buy luxury houses they never expected that a time would come when they would not be able to make good the monthly payments on the loans that they had taken. When the going is good, people often splurge on non –essentials and the rosy outlook at the fat paychecks make people quite blind to the possibility that the tide may turn and the outlook could get gloomy. People buying Gucci and Armani, or splurging on the latest condos or expensive BMWs never dreamt that the economic downturn could come like a great tsunami and sweep away s many people’s dreams and aspirations in its cruel wake.
Let’s consider what
Foreclosure and bankruptcy mean. Foreclosure is a terms whereby a person lose his or her lien or claim to a property on account of inability to pay one’s loan related dues. This terms has come to be very common in the US, where the property that was bought taking a loan from a bank or a financial institution is then vested with the lender and is subsequently auctioned off by the creditor in order to make good the loan by means of the proceeds of the auction. It is always better to try avoiding a foreclosure by renegotiating terms with your lender if possible as a foreclosure remains on your credit report for 7 years and makes it very difficult for you to get another loan for quite some time.
In Foreclosure and bankruptcy, bankruptcy occurs when you declare yourself insolvent and unable to pay a host of loans and not just home loans. Well in bankruptcy there are certain federal and state laws that determine whether you file under Chapter 7 or Chapter 13 under different conditions and with different consequences. If some cases of bankruptcy you are allowed to keep the property and pay back the loan under different terms while in other cases liquidation of the asset/s is done in order to make good the debts.
