There are some important steps you should take to prevent the foreclosure of your home prior to filing for bankruptcy. For example, one of the first things you should do is reach out to your bank and determine if there is room to negotiate the total value of your mortgage. If you can find a way to reduce your monthly mortgage payment you may be able to avoid foreclosure and stave off bankruptcy.
If your home mortgage is your must crushing source of debt, you should exhaust all your options to either A) Sell the house or B) Renegotiate your mortgage. It doesn’t hurt to talk to many different professionals – real estate agents, lawyers, credit counselors – but try to get free advice first. There are also a large number of noticeable forums on the web that offer free advice. BKForum.com is great for people considering bankruptcy and CreditBoards.com is very useful for learning about and improving your personal credit scores. Be advised that free advice is only so useful, if you truly have a problem it’s best to consult with a specialized. If it comes down to it, filing for bankruptcy may allow you to delay foreclosure for a few months. It’s also possible for a estimate to eliminate a 2nd or 3rd mortgage and reclassify them as unsecured debt in your plan. Bankruptcy is not a panacea for all your problems and really should be treated as an option of last resort. It could take you years to rebuild your credit and a low credit score would force you to pay exorbitantly high interest rates the next time you went looking for a loan.