Foreclosure Alternatives: Bankruptcy
A bankruptcy may stop a foreclosure and allow a homeowner to reorganize his debt and keep his property. The reality however is that most of the time this is not the case and the bankruptcy only stalls the foreclosure. If the homeowner is not able to make the payments after bankruptcy the house will foreclose anyway.
The other major drawback to bankruptcy is that it makes it very difficult for the homeowner to sell his property once he enters the process. It makes it near impossible to negotiate a short sale. The only possibility is if the trustee of the bankruptcy agrees to release the property from the proceedings and allow it to be sold.
Certified Distressed Property Institute, LLC, 2008
Links:
Bankruptcy: http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html
Short Sale: http://homebuying.about.com/od/glossarys/g/ShortSale.htm
