Legal Question in Real Estate Law in Washington

Re: foreclosure or bankruptsy

Foreclosure is where the lender seeks to recover the property subject to the mortgage in order to get as much of the loan repaid as possible. The lender will sell the property at auction, and if there is a shortfall they can pursue you for the remainder.

Bankruptcy on the other hand is where you as the petitioner (assuming it would be voluntary filing) would seek relief from your creditors by having the bankruptcy court discharge your debts. There two main chapters for consumers, Chapter 7 and 13. Chapter 7 is a full liquidation of your assets (with exceptions), and complete discharge of all debts that can be discharged under the code. Chapter 13 is a personal reorganization plan, where you provide the court a plan under which you will repay a percentage of your debt over a 3 to 5 year period, and at the end of which the remaining debt will be discharged. If you are attempting to save your home, and are able to make the monthly mortgage payments in full, then Chapter 13 would be the way to go.