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Which Is Worse Foreclosure or Bankruptcy? The Pros And Cons


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You see, making a decision about which path to pursue depends on your evaluation of your individual situation.



  • Chapter 7 Eliminates Debt and allows you to keep any equity in your home. If your problem is primarily consumer debt, this may be the best option for you - if you qualify.

  • Chapter 13 restructures debt allowing you to pay off the amount in a way that makes sense for your family.

  • Filing for bankruptcy stops the foreclosure action on your home.

  • If you lose the home during bankruptcy, you will be able to qualify for a new mortgage in as little as two years as long as you keep your credit clean after discharge.

  • Many people find that their credit scores actually rise slightly after bankruptcy because there is new money available for purchases.


  • Many people who file for Chapter 13 fall out of bankruptcy and lose the court protection provided. This means that they often not only have the bankruptcy on their record, they also face foreclosure proceedings once again.

  • If you abuse the system - doing a “face filing" bankruptcy for the sole purpose of delaying the foreclosure, you may face fines from the court.

  • Bankruptcy stays on your credit report for ten full years - longer than just about any other negative credit mark.



  • Stays on your record for just 7 years

  • Won't risk falling out of foreclosure and having both a bankruptcy and foreclosure on your record


  • You lose your home and any equity in it

  • Generally cannot get a new mortgage for at least 4 years.

  • Possibility of a deficiency judgment against you which will require a bankruptcy filing anyway

    If you're trying to decide which is worse, bankruptcy or foreclosure, you need to get the new report The Foreclosure Survival Guide which outlines the process of foreclosure and details many options homeowners facing foreclosures have. This free report will help you make smart decisions on whether to allow your home to go into foreclosure or whether to pursue other options. Get your free report today.

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