Prepare yourself thoroughly before you speak to your lender’s loss mitigation department. Arm yourself with copies of all of your bills for the past year, both paid and unpaid. Also have copies of your pay stubs or other proof of income for at least one or two months. You might also be required to produce copies of your tax returns for the past two to three years. If there is a specific hardship that has come up which has impacted your ability to pay, you need to be able to prove it.

When you are working with a lender to get a modification, you must keep records of everything that is said, as well as any correspondence sent or received. Some banks are notorious for saying they didn’t receive something when they did or trying to change the terms that were agreed to. Get a recording device for your phone and use it. Keep anything you get from the lender in the mail and keep copies of anything you send to the lender.

It can be tempting to spend the money that would normally go toward your house payment on other things, since you can’t afford the house payment anyhow. This is a really bad idea. If the lender does agree to modify the terms of your loan, they will want an upfront payment to show that you are serious. If you don’t have anything to offer them, they are going to want to know what you did with the money.

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When people carry so much debt that the only debt relief they can expect to achieve is through bankruptcy, clearly these people are experiencing serious financial pressures. But even when such pressures leave people with no other options, they often continue to have doubts about whether or not filing bankruptcy is the right option.
-You are unable to meet your monthly obligations. If you cannot meet your obligations, then Chapter 7 makes sense. Period.
-Your income has been reduced or eliminated. If you have no income, or it has been reduced to a point that you cannot meet your obligations, then Chapter 7 makes sense.
-Your credit debt obligations are keeping you back from the basic necessities. If you have enough credit debt that you have to choose between making your debt payments or feeding your family, then Chapter 7 might be your best option.
-Your income does not meet the mean for your state as dictated by the US Census Bureau. The figure published by the Census Bureau is agreeably low; if your income is below this mean, then you should consider Chapter 7 bankruptcy if you are unable to meet your obligations as well as your personal financial obligations.

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