What Is The Difference Between Bankruptcy And Foreclosure ?  

There are a lot of people who might be hearing the two most dangerous words of their lives like ‘foreclosure’ and ‘bankruptcy’ in case they are unable to repay their debts. They are absolutely sure about the differences between these two words but talking of people who are excluded of this bracket, they might have some confusion regarding the dissimilarity between them. In order to get a clearer idea about how these two things differ from each other, it is better to understand them properly.

As far as bankruptcy is concerned, it is basically a court action that is filed by some borrower known as the debtor. It is normally filed in a federal district court which falls under the district wherein the borrower resides. It is similar in all the states depending upon the federal law though there is always scope for some exceptions.

On the other hand, foreclosure is referred to as a legal action that is pursued by some mortgage lender. It may either be a self help action or some court action depending upon the states where the real property or the house is located. The basic purpose behind a foreclosure is to get either the money that the mortgage lender needs to repay or the house itself that was given as the collateral for the granted loan. Foreclosure is different based on the laws followed by different states. Thus these two terms are entirely different and have different meanings as well as functionality. It is advisable to have a proper understanding of all the pros and cons of both before going for any of these options.

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