Bankruptcy VS. Foreclosure

Small Business Owners, Entrepreneurs and even career professionals in this market may be entering a Financial Crisis due to failing real estate prices that are killing our economy.

You may be in between the Valley of Decision in between and two very hard rocks and both options will ruin your credit and make you feel like a looser but what choice do you have and what choice do many of us have?

Foreclosure is an option when you have no equity and are unable to sell, refinance or make the payments. First try to talk to the lender about the situation and see if they give you any options. Then be very sure that the market won't recover in a reasonable amount of time.

Then consider family members and their feelings. Some may be adversely affected when asked to pull up their roots. Walking away from your home is never an easy decision but if you have no source of income and the savings are getting low it may be your wisest choice.

Bailing out now and preserving what you have left may sound good now but do know that your lender could try to sue you for the balance or try to take other assets such as homes you may have. So don't just assume you will escape with out a scratch if you bail out.

Bankruptcy could be a viable option when you not only have an upside down mortgage but you also have debt you can not repay. Bankruptcy additionally does not always mean that you will lose your house either. You can do a Chapter 13 and restructure you debt including past due mortgage payments and pay penny's on the dollar when you agree to repay your debts with a reduced payment structure.

Explore both options and consult with a professional before making any decisions as they are both unpleasant experiences but perfectly a legal options when you are stuck between two very hard rocks and a bulldozer.

For more information check out: http://www.irs.gov/publications/p908/index.html