Millions of people facing foreclosure are being tempted with ads about filing for bankruptcy as a way out of their problems. This may not affect you directly, but perhaps you know a friend, family member or co-worker who is going through this. So let's consider a couple of scenarios and see if the bankruptcy option holds water. If you bought your home in the last two or three years and almost immediately fell behind on payments, then the reality is that you may not be able to keep your home. But that doesn't automatically mean foreclosure. Try instead to arrange a short sale with your lender's permission. This may help the lender avoid the usual $70,000 cost of foreclosure, while it will help you avoid the stigma of foreclosure. Approach your lender several times if you don't initially get the answer you want. A second alternative to bankruptcy would be to arrange for something called a deed in lieu of foreclosure. This is like a voluntary turn-in of your property. This will probably appeal to lenders in states where they'd have to incur the expense of going to court to proceed with foreclosure. One thing to keep in mind about bankruptcy is that while it may help you today, it will not help you in the long run. Sometimes the best option is to allow foreclosure to proceed if it's unavoidable. It's like closing a bad chapter in your life and moving on. Let's consider one other kind of scenario. Say you're a longtime owner who has fallen on hard times now but has a good payment history. Then you might want to seek a loan modification, forbearance or a Chapter 13 bankruptcy filing as a last resort before you lose your home. With Chapter 13, you can remain in your home and develop a workout if you already have demonstrated a good payment history. Bear in mind that Clark's really over-generalizing here. He's laying out a road map, and you need to see where you fit on the road.