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Guru_Guy, Attorney
Category: Bankruptcy Law
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Experience:  Years of experience providing advice on bankruptcy and other alternatives to debt problems.
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What is the difference to me personally between bankruptsy

Resolved Question:

What is the difference to me personally between bankruptsy and foreclosure? And how does it effect me personally.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Guru_Guy replied 8 years ago.

Foreclosure means the lender or lenders that provided you with a mortgage are seizing the home because you have not been repaying the debt. It has no impact on any other debts you may have. In some States, if the home cannot be sold for the full amount of the debt, the creditor can come after you for the remainder. Even if the creditor writes off the debt, you may be forced to declare that forgiven debt as taxable income on your income taxes.

Bankruptcy allows you to have most of your debts discharged, not just your home mortgage. Creditors who have debt discharged cannot come after you later for any debts not paid (unless you voluntarily reaffirm the loan). Any debt that is forgiven as part of a bankruptcy is not considered taxable income.

Both a foreclosure or bankruptcy will result in a very low credit rating. A foreclosure remains on your record for seven years. A bankruptcy remains for 10 years.

I hope this helps!

Please keep in mind that information in this forum is for informational purposes only. It is not legal advice and does not constitute creation of an attorney client relationship. Before acting on any such information, you are always advised to consult with an attorney licensed to practice in your jurisdiction who can take the time to review all the facts and laws relevant to your situation.
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