Foreclosure means that the court will take property from a homeowner who is unable to pay his mortgage. Missing one mortgage payment will not lead to foreclosure, but missing multiple payments or not notifying your mortgage bank of your financial situation will increase the likelihood of being foreclosed on.
If you know that your home is going to be foreclosed on and you think bankruptcy might be an option for you, you have a few things to consider. Sometimes you will not have a choice, but it depends on your individual situation. Foreclosures can take place very rapidly, or they can be drawn out.
If you have the option, filing for bankruptcy before foreclosure is normally what a Mesa bankruptcy attorney will advise. When a home is foreclosed on, it will often be sold at a much lower price than it is worth. This is called a deficiency, and, in some cases, the person foreclosed on may be responsible for repaying the difference between the mortgage value and the lower price. Bankruptcy can completely eradicate deficiency debt, if filed after the foreclosure. If filed before, you may never have to deal with deficiency debt as your mortgage debt will be discharged.
The good news is this: if you file for bankruptcy before your home is foreclosed on, an automatic stay may be put in place that will prevent the foreclosure from moving forward. Sometimes this will give you several months to build savings while staying in your home to pay off debt, and even prevent a foreclosure from occurring.