If you are going to default on third or fourth terms of your mortgage loan, it is time to get mentally prepared for receiving the dreaded notice of home foreclosure from your creditor. Your creditor can start the legal process of repossessing your property after 20 to 30 days after sending you a letter of notification. Very naturally it creates frustration in you as you are going to lose your home or business asset. Now in this situation, the one and only solution you can avail is filing bankruptcy. If it is your personal property then you can file chapter7 bankruptcy and if it is business property, then you should go for chapter11 bankruptcy. However, the problem is that in America we are always being told that our credit score is almost everything in our life. And the fact is that once you file for bankruptcy, the information on your credit report stays for ten long years which is a huge drawback for bankruptcy. But on the other hand, you have to try to save your foreclosing property and here your last option is appearing before the court and declaring bankruptcy.

Now, on the face of impending property foreclosure when you file chapter 7 bankruptcy, an automatic stay order is made in effect on the foreclosing process. It is done by the order of court inhibiting your creditor to proceed with his legal process or even collection activity. However, it can halt your creditor for typically three to four months. But chapter 7 does not give you the guarantee that your creditor will not be able to commence his legal process again.

If your creditor is persuasive enough he can obtain the grant of the bankruptcy court to go on with the selling process of your property at the auction. It is termed in judicial language as ‘motion to lift the stay’ order.

Chapter 11 bankruptcy is usually filed in case of business debt. Here, the benefit is that you can retain your property intact or the business process after reorganizing the pattern of your debt repayment schemes. Interest rates and late fines are waved off to reduce the pressure of debt burden from the head of a debtor. However, in some cases of chapter 11, the court may sell the debt to other company in order to save the employees from job lose.

Now, let me come to the point of post bankruptcy credit score effect. As I mentioned before that your credit score get a deep scar due to filing bankruptcy. And there are some credit repairing agencies that take just this opportunity of your hopeless condition. They bombard you with tall claims that within 30 days they will erase all your negative marking from your credit report including bankruptcy, bank lien or tax lien etc. They ask you enrollment charge even before showing you any kind of tangible performance. Sometimes, they even provoke you to invent a new credit identity. For your better knowledge, let me assure you that most of these agencies are a scam. It is better to avoid them and try to get familiar with legitimate procedure of credit repairing by yourself.

Bankruptcy can adversely affect your credit future but with patience and perseverance you can try to better your credit health. Otherwise, if you are lured by their idea, it can back fire you and strap you into more hassle.

Author’s Bio: Suzanne Collins is a contributory guest columnist, financial advisor, blogger, editor for various websites and blog including Oak View Law Group, CCHFA, CDF etc . She has completed her Post Graduation in Mass Communication from Texas and is currently working with a Media House in Texas itself. She loves to write articles during her spare time especially on topics like bankruptcy, helping women articles, monetary policies, etc.