Foreclosure

Foreclosure is one of the most severe and difficult financial processes for any consumer. Unfortunately, foreclosures are also peaking, meaning thousands of American families are now facing this dire consequence. What does it mean, and what can you do to avoid foreclosure?

What is Foreclosure?

Foreclosure is the legal process through which a lender (most typically a mortgage lender) claims an asset from the consumer borrower. Foreclosure is almost always the result of default on payment. A very important consideration for mortgage payment is that lenders cannot take partial payment on the mortgage monthly payment. What that means is that, unlike a credit card, you cannot mail in a portion of your payment… a mortgage payment is all or nothing. This also means that if you miss one payment, the next month you have to re-pay the current month and all arrears! This, in addition to exotic mortgage products and rising rates, can drive many otherwise financially stable people into foreclosure.

There are two types of foreclosure: judicial and non-judicial foreclosure.

Judicial Foreclosure:

A judicial foreclosure basically means that the foreclosure is a court ordered legal process. Instead of a trustee, the foreclosure actual moves (sometimes moves very slowly) through the court system. In states that use a judicial foreclosure process, the mortgage deed or mortgage lien does not have a forced power of sale clause… so the lender has to formally take the homeowner to court. This can help by buying you some time.

Non-judiciary Foreclosure, or Statutory Foreclosure:

Many states avoid the judicial foreclosure process, and instead, the mortgage lender notifies the borrower with a notice of default. Since the mortgage loan terms already specify that a sale process kicks off right away (without going through the court system) – the lender can start the foreclosure process very quickly. Then the borrower has a fixed period of time (which varies state by state) to either sell the home, or negotiate to solve the financial problem. If the consumer does not accomplish this on their own, the mortgage lender then can come in and auction off
the home to the highest bidder.

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It’s common knowledge that bankruptcy isn’t for everyone. Some of its disadvantages may be too burdensome for you to carry. But what if your financial situation seems to merit no other way out? Even if it’s not for you, it’s never a good idea to completely write bankruptcy off your list of options.

Think about what would happen if you DIDN’T file for bankruptcy, as well as what you’ll be dealing with when you did. Filing for Chapter 7 bankruptcy may be a social stigma, and many people rightly treat the option as a last resort. No one really wants to handle the shame of saying they went bankrupt.

But the problem about this kind of mindset is that if you didn’t file for bankruptcy, you might stand to lose what little savings and retirement funds you have left to pay back your debts!

So before you dip into your savings or pension funds to keep your bill collectors off your back, it’s a good idea to really see what a Chapter 7 (or even Chapter 13) bankruptcy filing can do to help you.

It won’t make sense to wipe out all your savings or taking a home equity loan and put your house at risk just to pay off bills and credit card debt. While taking that kind of hardcore responsibility is an important thing to do, you don’t really have to willingly ruin yourself when the law can be more forgiving than you think.

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Bankruptcy is probably the biggest financial decision anybody is going to make in their lives. But before you decide on anything, scrutinize your finances and cut your expenses first. When you’ve cut unnecessary expenses you might realize that you can better manage your budget and that declaring bankruptcy isn’t needed yet.

Below are a few expenses to consider to stretch your budget:

Day-to-day Doodads

Robert Kiyosaki was the one who coined the term “doodads.” This refers to all the little trinkets and whims you buy that can hurt you financially, since they do not give you any monetary returns.

Doodads can range from a pricey car in the driveway to daily coffee breaks at Starbucks. Now that’s not saying that you can never enjoy a cup of coffee, but have you seen the prices of a latte nowadays? It’s very easy to splurge hundreds of dollars in snacks a month without even noticing it.

Such expenses accumulate very fast. You don’t notice them until you realize your wallet is empty. The sad thing about this situation is that sometimes you can’t even remember where you spent the money. You must make a conscious effort to cut down on these things as little purchases can add up very fast.

Presents

Do you have the habit of giving expensive presents to make an impact on your clients? This is one habit that must be stopped if you want to keep your financial boat afloat.

Car payments

If you’re having financial problems, it would be wise to sell the new car to free up some badly needed cash. There’s nothing wrong with driving the old reliable.

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For more information please visit: http://www.floridalawattorney.com