What is the difference between foreclosure and bankruptcy?

Foreclosure and bankruptcy are two options available to individuals with a mortgage debt they cannot pay. Generally, foreclosure and bankruptcy are seen as the two extremes, but they each have differences. Foreclosure is a process where the lender attempts to repossess the mortgaged property by selling it at auction due to non-payment of the mortgage debt. Foreclosure can occur through judicial or non-judicial processes, depending on Washington state law. During judicial foreclosure, the lender must file a lawsuit and obtain an order of foreclosure from the court before the property can be sold. Non-judicial foreclosure does not require court action or court approval and normally proceeds faster. Bankruptcy, on the other hand, is a legal process where an individual or business can obtain debt relief by filing a petition in federal bankruptcy court. Through bankruptcy, a debtor can be given relief from debts like credit cards and medical bills. In a bankruptcy, the lender can no longer pursue the borrower for the unpaid debt. The goal of bankruptcy is to provide a fresh start. The main difference between foreclosure and bankruptcy is that foreclosure involves the lender attempting to obtain the property and the unpaid debt, while bankruptcy gives the debtor a chance to get out of debt. In Washington, an individual should seek the advice of a legal professional when deciding which option to choose.

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