Bankruptcy should probably be your option of last resort. First, a bankruptcy can only delay the foreclosure unless you intend to resume normal payments. If the bankruptcy allows you to unload or delay unsecured debt and focus your income on your house payment, it may help. But bankruptcy will not allow you to stay in a house without paying the payment long as your lender can ask for the bankruptcy stay to be lifted and proceed with foreclosure if they can show that you cannot make the payment.
Second consideration is the cost of the bankruptcy. Not only do you have to consider your own expenses, but the mortgage company may be able to tack its own legal expenses onto the balance of your mortgage.
Finally, consider the effect of a bankruptcy on your credit record. Unlike most items, a bankruptcy may remain on your credit report up to ten years. Reportedly, credit bureaus remove discharged bankruptcies after 7 years but leave dismissed bankruptcies on the record for 10. Legally they are allowed to report either for 10 years. If it’s a short term cash crunch that has you in a bind, putting off other bills to make your house payment may be preferable to bankruptcy - the slow pays will only reflect for 7 years and a few slow pays is not as detrimental to your credit score as a bankruptcy of the same age.
