Differences

• Foreclosure happens to a piece of property that has a loan on it. When the borrower has failed to pay mortgage to the lender, the property could become the lender’s once again. Bankruptcy happens when a company or individual is unable to pay creditors. Filing for bankruptcy helps pay off the debt to the creditors. Even though both help with finances, they hurt your credit and can make it difficult to purchase items that require borrowing.
  
  

Foreclosure

• According to BusinessDictionary.com, foreclosure is defined as when a lender cancels the borrower’s right to redeem the mortgaged property. If a house goes into foreclosure, the court system comes up with a date for the borrower to come up with the loan balance and foreclosure expenses. The lender is then able to sell the property and pay the remaining amount to the borrower, if there is any. If the property isn’t able to sell, the borrower is liable for the due amount.
  
  

Foreclosure Order

• A foreclosure order is a court order for the lender to take away the ownership rights of the borrower, according to BusinessDictionary.com. So, if a borrower had a mortgaged house from the lender, the borrower’s right would be taken away from that house and the lender would own it once again.
  
  

Bankruptcy

• Bankruptcy is a way for those who owe money to creditors to start fresh and get rid of debt. So, to pay back the creditor, the debtor can have his assets liquidated or set up a payment plan. Bankruptcy can also help businesses that are troubled by reorganizing the business or liquidating assets. Federal courts look at bankruptcy cases, not state courts.
  
  

Chapters

• According to Bankruptcy Basics, a online guide issued by the United States Courts that goes over detailed information about bankruptcies, there are three main chapters of bankruptcy: Chapter 7, Chapter 11 and Chapter 13. Chapter 7 bankruptcy is liquidation bankruptcy. So, all the debtor’s nonexempt assets are liquidated and sold to pay off creditors. Chapter 11 bankruptcy is known as “reorganization” bankruptcy. This type of bankruptcy can be for corporations, businesses or individuals. Chapter 13 bankruptcy is set up for individuals with a regular income. This type of bankruptcy sets up a plan for the individual to pay back the creditors over three to five years.