If you’ve considered all the possible ways of avoiding foreclosure of your home in Pennsylvania, and think that it will be impossible to avoid foreclosure, you will likely be better of losing your home in a bankruptcy sale.
One advantage is that the sale of your home will be overseen by the bankruptcy trustee. He has the incentive to sell your house for as much as possible. On the otherhand, in a foreclosure sale, the creditor only cares about getting enough to cover the debt of the mortgage.
Additionally, you’ll benefit from the homestead exemption. If you have equity in your home, and it’s sold in a bankruptcy sale, you’ll be given the amount of the homestead exemption in cash. If your home is sold off in a bankruptcy sale, you won’t benefit from the homestead exemption.
The bankruptcy trustee will however, only have incentive to sell your home if you have equity in it. If you don’t have equity in your home to pay off your creditors, he’ll likely just abandon it as part of the bankruptcy estate. In that case, you may end up facing a regular foreclosure sale, after the bankruptcy process is over.
