Which is worse for your credit bankruptcy or a foreclosure?

Answer 1

Bankruptcy and foreclosure are both derogatory legal actions in the public record portion of a consumer's credit report. As such, they will each have a significant impact on any person's credit standing. How much either would impact your credit would depend on ALL the factors showing in your credit. You should consult with a knowledgable attorney to discuss the implications prior to proceeding with either action. Bankruptcy, being the last resort for many consumers, has a 10-year statute of limitation. It hopefully clears away all outstanding debt and can (in some states) preserve important assets, like a home. Foreclosure has a 7 year SOL. But there would be a "double hit" to a consumer's credit score; once for the trade line and another hit (with it's own 7 year SOL) for the legal entry. Any consumer having a foreclosure would find it extremely difficult to get mortgage financing for a large period of the time it shows. Obviously, to a mortgage lender, foreclosure is the worst indicator of risk when evaluating a potential borrower for a home loan. So, all factors, including your future goals, would need to be taken into consideration before making a decision between these two actions.