What is the difference between foreclosure and bankruptcy?

The difference between foreclosure and bankruptcy is an important one to understand. Foreclosure is the act of a lender reclaiming a property that a borrower has failed to make payments on. This can occur if the borrower has defaulted on a loan or mortgage agreement. Bankruptcy, on the other hand, is a legal process that helps a person, business, or other entity to resolve debts that they cannot repay. In Massachusetts, a foreclosure occurs when a borrower has failed to make mortgage payments or otherwise failed to meet the terms of a loan agreement. A lender may then take possession of a borrower’s property and attempt to recoup some of the debt by selling the property at an auction. The proceeds of the auction are then used to pay off the debt owed and the remaining balance is deposited back into the borrower’s account. Bankruptcy, on the other hand, is a process in which a person or entity is unable to pay its outstanding debt obligations. A person or entity who files for bankruptcy may complete the process with either a Chapter 7 or Chapter 13 filing. During the process, a bankruptcy court will review the individual or entity’s finances and decide on a plan that could best resolve the outstanding debt. In summary, the difference between foreclosure and bankruptcy is that in foreclosure, a lender reclaims a property from a borrower who has failed to make payments, while in bankruptcy the court works with a person or entity to help them resolve debts they cannot repay.

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What is the difference between foreclosure and bankruptcy?

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