Does foreclosure always occur with Bankruptcy?

If you are facing foreclosure, bankruptcy should be a last resort option.. Most people file bankruptcy when they have unsecured debt that is overwhelming, do not have substantial assets and have exhausted all other options. When you file for bankruptcy, your lender must temporarily stop foreclosure proceedings against you until after the bankruptcy is discharged.  If you file for Chapter 7, your assets are sold to pay off your creditors, excluding certain statutory exempt assets such as your home, car or personal property, as long as they fall within the exemption values.  Unsecured debt is discharged in Chapter 7 bankruptcy.  If you want to keep your home, car and other personal assets, filing a Chapter 13 bankruptcy is the best option for you.  In a Chapter 13, you enter into a court-approved repayment plan with your creditors, who agree to reduce your debts.  The plan is generally for 3-5 years.  However, if you default again on your mortgage payments, your lender could foreclosure. Then you would have a foreclosure bankruptcy on your credit report. Foreclosure stays on your credit 7 years, and bankruptcy stays on your credit 10 years. Having both on your credit history is extremely damaging, and can lower your score as much as 200- 300 points or more.  So you should try and avoid foreclosure bankruptcy whenever possible.  

It is recommended that you speak with a bankrutpcy/foreclosure prevention attorney before filing for bankruptcy if you are facing a foreclosure.  Negotiating a foreclosure prevention solution with your lender make more sense and has less negative impact on your credit score.