Many American households are a few weeks of unpaid sick leave or a car crash away from not being able to cover all their household expenses. Missed wages or unexpected bills can quickly lead to financial hardship.
When you can’t make your budget work anymore, you might find yourself falling behind with your mortgage, as well as other accounts. Depending on the terms set with your lender when you purchased or refinanced your home, you could be facing foreclosure in a matter of weeks after a missed payment.
Receiving a foreclosure notice in the mail doesn’t mean that your situation is hopeless. It simply means that you need to take action now to protect your property and defend yourself. Inaction means risking losing out on one of the biggest investments you have made thus far in your life.
Repayment in full is an option early on for some
If you fell behind on your mortgage because you were struggling for a few weeks but have since regained financial control, you may be able to negotiate with your lender directly. In some cases, you may be able to renegotiate certain terms for your mortgage in order to make it easier to repay.
Other times, if you are able to simply repay them as payments with any necessary fees in a timely manner, the lender will stop foreclosure proceedings. Even if they foreclose and sell the property, you still have a time where you can redeem the property by paying the balance owed on it in full.
What will foreclosure involve for your home?
Depending on the terms of your mortgage, a foreclosure might involve going to court, or it could be as simple as the lender filing a deed with the county recorder. Some loans require that the borrower sign a deed in lieu of foreclosure to streamline the lender reclaiming the property. Other loans might include a clause that allows the lender to sell the property without going to court if the borrower misses payments.
Bankruptcy can help you negotiate and stop foreclosure
If you know that you won’t be able to repay the missed payments quickly, bankruptcy could put you in a position to negotiate. Chapter 13 bankruptcy proceedings typically involve the restructuring of debt, although you can likely negotiate for better terms no matter what form of bankruptcy you file.
Your lender may be more likely to work with you if they know you are serious enough to file bankruptcy. You may be able to move the missed payments to the end of your loan, reduce your monthly payments or otherwise find terms that will help you avoid foreclosure.