Should I file bankruptcy right away to stop a foreclosure from showing up on my credit?

Maybe, but your credit is going to be bad either way.

Today I received a call from a client who has a home being sold at a foreclosure sale this month.  She doesn’t live there and doesn’t necessarily need to stop the sale.  She has a medical procedure in a couple of months that may be very costly, and may or may not be covered by her insurance.

She had been advised to file bankruptcy before the foreclosure sale to protect her credit, and I advised that we wait until after the medical procedure.  It could be a very costly one, and she may need to go bankruptcy on that debt as well.

As far as credit goes, her friend may be right.  Filing bankruptcy before a foreclosure would mean that you would only have the black mark of bankruptcy on your credit report, instead of a foreclosure followed by bankruptcy.  But, that tiny difference in a credit score is not worth the risk of having a huge medical bill two months after filing bankruptcy (a bill which could not be included in your already-filed bankruptcy).

So in my opinion, she needs to wait.  Her credit will suffer a little more, but we will have the cushion of the next two months to see what actually happens with her medical procedure.