For many people who have lost their jobs, the prospect of losing their homes is a major concern – and for good reason. No one wants to deal with the stress and pain of going through foreclosure, being evicted from their home, and having to find somewhere else to live. And many people see mortgage lenders as being particularly unforgiving – they think that the lender would like nothing better than to take possession of their homes and sell them.

If you’ve lost your job, the thing to remember is that your lender really doesn’t want to repossess your home. Mortgage lenders lose millions of dollars every year on foreclosures, because they can only sell the homes for a fraction of what they’re worth.

Not only that, but mortgage companies incur thousands of dollars in legal fees and other expenses every time they foreclose on a home. So it’s in your lender’s best interest to help you find a way to stay in your house.

It’s critical to contact your mortgage lender as soon as you lose your job, even if you haven’t missed a payment yet. Being proactive wins quite a few points with mortgage companies, because they see that you are willing to work with them. They will give a borrower who stays in contact a lot more leeway than someone who ignores the problem.

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The recent housing slump has hurt everyone. Interest rates went up, making it very hard for people to make their monthly payments. The the banks started to foreclose on these houses and suddenly the market was glutted with houses that no one could buy. This had the unfortunate effect of making the property values go down. When the housing values went down, it became almost impossible for many people to refinance. The mortgage holder must have 20% equity in the house to be able to qualify for refinancing, however when the house lost its value the result was that the equity was suddenly gone.

President Obama’s plan is an effort to to help the struggling homeowner who has so far been able to make the monthly payment, but do to circumstances beyond their control would soon face the lost of their home.

The two major mortgage holders Fannie Mae and Freddie Mac, will be held to using guidelines set in effect by the government, concerning loans they either own or guarantee. This plan offers a reward to the companies who work within the guidelines and help homeowners refinance their houses. The Government will help differ the cost of the extra paper work by offering the servicer a fee of $1000 for each eligible loan modification. With an other fee of $1000 each year up to 3 years for successful loan modification.

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Taking into consideration the current recession that has not yet come to an end, and recent reports that bank earning will not increase by the end of this year, many people have turned to filing bankruptcy.  Such filings have increased 34% year-over-year as of July, 2009.

It is important to note that Bankruptcy should definitely be used as a last resort. Therefore, here are some tips and alternatives, those considering bankruptcy, can read prior to filing.

• Set up a Budget - Determine your monthly income, what is needed to take care of your primary bills and what is left to spend.
• Talk to Your Creditors – They are fully aware of the current situation throughout the country and attempt to come to an agreement at least for minimum payment that fits your budget.
• Avoid Overextending your Credit - Meaning do not purchase/pay more than what you can actually pay for.

On the other hand, say for example: You are currently out of a job, making your budget much lower than what you expected, barely making it through your regular utility bills and not much left to pay creditors. You find yourself in a situation were you cannot make arrangements with your creditors and your credit score is falling. Before filing for bankruptcy, consider the following bankruptcy alternatives:

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