Explain the difference between bankruptcy and foreclosure and their typical impacts on credit.

Explain the difference between bankruptcy and foreclosure and their typical impacts on credit.

• A. Bankruptcy is a legal process to discharge debts; foreclosure is loss of property due to mortgage default; both negatively impact credit.
• B. Bankruptcy cures debt entirely with no impact; foreclosure improves credit.
• C. Bankruptcy and foreclosure have no impact on credit.
• D. Foreclosure has no impact on credit if you rent afterward.

Answer: (A)