Wikipedia describes foreclosure as:
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.
Foreclosure can be very distressful for both of the parties that are going through the process. Losing a home because you cannot afford the payments is embarrassing, frustrating and can create some depression. The process is very strict and the banks usually either want their money or your home, whichever they can get.
There are methods of avoiding Foreclosure. Some banks will allow you to append the missed payments to the rear of your loan. If you have enough equity, some banks will allow you to refinance and take cash out if the reason that you are in foreclosure is temporary. A chapter 13 Bankruptcy will delay the process. However, if you are unable to begin making payments properly, the bank will be forced to proceed with the foreclosure. Similarly, a Chapter 7 Bankruptcy will delay the process. This method allows you to discharge a large part of the debt and may allow you to restructure and “reaffirm” your house and begin making payments again.