Should You File for Bankruptcy Before or After Foreclosure

If you are having financial difficulties such that you risk foreclosure, you may consider filing for bankruptcy. However, the timing might make a big difference. The time you need to file for bankruptcy depends on different conditions. The main factor determining when to file for bankruptcy depends on what you intend to do with your house. Here is an overview of how you benefit from filing for bankruptcy before or after foreclosure. 

Filing for Bankruptcy Before Foreclosure

You may need to file for bankruptcy before the foreclosure sale in some situations. Here are the benefits of filing before foreclosure.

·         You Want your Mortgage Modified

If you face foreclosure, it is crucial to work with Benenati Law Firm to help with your mortgage modification. Filing before foreclosure ensures you do not lose your home. You will be going through the court, and that means you have time to have your loan modified before foreclosure resumes. It would be best if you negotiated a loan modification with your bank. With your debts discharged, it is easy to have your installment loans modified.

·         You Want to Stay More in Your House

Filing for bankruptcy before foreclosure goes through halts the process. This way, your house is safe, and the lender has no right to sell your home at the moment. This will give you more time to stay.

·         You Want to File for Chapter 13 Bankruptcy

Chapter 13 bankruptcy requires you to pay your creditors within five years. In return, you get to keep your house. The good thing about filing for Chapter 13 bankruptcy is that you have a chance to pay your mortgage over the period you have planned.

·         You Need Peace of Mind

If you are not planning to keep your house and you can file for bankruptcy before foreclosure, it gives you peace of mind. You do not need to worry about the deficiency balance before the foreclosure.

Filing for Bankruptcy After Foreclosure

You might want the foreclosure to go through and then file for bankruptcy in other situations. Here are the advantages.

·         You Want to Avoid Deficiency

After foreclosure, you do not incur mortgage deficiency balances when you file for bankruptcy. A deficiency refers to the difference between the market value of the property and how much you owe the lender. It saves you from deficiency liability such that the lender cannot sue you should they sell the house at a lower amount than you owe them. 

·         You Have Property and Assets of Value

Some states allow debtors to keep personal assets if they no longer own the house. Therefore, filing for bankruptcy after foreclosure may allow you to keep your assets. Thus, if you have valuable assets, filing after foreclosure will enable you to keep them. You do not have to start from scratch once you lose your home. 


Sometimes you might not have a choice about when to file for bankruptcy. However, if you have the freedom, consider the reasons mentioned above. Then, choose the timing based on what you intend to achieve.