What Is Worse - Bankruptcy Or Foreclosure

Feb. 27, 2012 - PRLog -- The recent financial squeeze has left many Canadians struggling with mortgage and other payments, and it does not seem to be letting up. Millions face a difficult dilemma, should they file bankruptcy or opt for foreclosure?

In fact, neither option will be an easy one. Both bankruptcy and foreclosure will remain on your credit report, the only difference being that bankruptcy will stay longer (http://www.yourloan.ca/loan-articles/declaring-bankruptcy-vs-filing-consumer-proposal/). At the same time, financial institutions do not look favorably on borrowers who have faced foreclosure.

Before you think of foreclosure, it is best to contact your financial institution. Do this if you are behind by a month or two and before the process has gone any further. If you have received a formal notice of default from your lender, it may seem to you like you are in serious trouble. However, nothing is lost, and you have time before the formal process of foreclosure begins. Of course, one question to answer is whether you want to keep the property, or you are willing to give it up. If you don't want to lose your house, do your best to make up for the missed payments. You can pay in a lump sum or spread them out. If this is not an option, you may talk to your lender and request that the loan is modified. For instance, you can ask if they can offer you a lower interest rate.

What happens if you declare bankruptcy? This can come at a price. You can use the services of a bankruptcy lawyer who will charge a hefty fee. On the other hand, it may be difficult to find a good professional because some of them are after profits and handle cases quickly. Thus, they may not give your bankruptcy case a proper attention. Other costs associated with the bankruptcy process include government fees for filing, court fees, mailing costs, etc. Your trustee in bankruptcy will probably require that you cover these costs. Windfalls you are entitled to or receive will be lost when you go bankrupt. These include money you get by luck, for instance, inheritance or lottery winnings. You will also lose a portion of your earnings or what is considered surplus income. Your trustee in bankruptcy will inform you how much you are required to pay. You should bring recent pay stubs to this purpose (http://www.yourloan.ca/personal-loans--credit/).

In addition, not all debts are eliminated including taxes, alimony, and debts due to fraud or injury. This holds true for penalties and fines as well.

Bankrutpcy will remain on your record for several years, and your application for a credit card or loan may be denied. What about possible discrimination against you? Discrimination against persons who have filed bankruptcy is prohibited by law. You cannot be denied public housing, a driver's license, or job on grounds that you have declared bankruptcy.

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