If you are having trouble with your mortgage, you could save your house and your finances with this article. Many people are in jeopardy of losing the greatest investment to a foreclosure within the next eighteen months. Unfortunately, not many people are aware that there are ways to avoid foreclosure. Here are six steps to prevent foreclosure from happening to your house.
-Contact the lender right away. The biggest mistake a borrower makes when they start to fail on payments is not contacting their mortgage lender. As soon as you realize you have a problem, call them immediately. The sooner you approach them, the better.
-Talk to the “loss mitigation” department. Check if your monthly statement has the contact numbers to the mitigation department of the company. This department helps borrowers find out which option they could qualify. However, remember that there are lenders who have their collection department advice you on workout options for your loan, so do not be surprised if you are sent to the collection department.
-Be open to discuss your situation with the lender. They will ask you several questions to assess your situation. Some lenders have specialists who have the training and technology to pre-qualify for a workout option over the phone. If you have the correct financial documents when you call, you might be able to get a resolution immediately. Make sure to organize your statements, bills and correspondence and other things relevant to give a correct picture of your current financial situation. It is important to be honest about your situation.
-Find out ways that your lender could help avoid a foreclosure. Depending on the situation, the lender should be able to offer you options to keep you house or liquidation options. Specifications for each varies with different lenders, however a general list of what to expect are this: retention options could lower the possibility of a foreclosure by eighty percent and include forbearance where it lets you pay less than the full amount of your loan for a temporary period. Another is the repayment plan where you will have to pay the outstanding amount in equal installments over a period. A reinstatement is you pay the total outstanding amount in one single payment on a specific date. The loan modification is where you loan term and interest rate is changed. In the liquidation option, if you simply cannot afford to stay in your home and unable to sell it, you might consider a short sale where you get an offer that is less than the amount you owe. The deed in lieu of a foreclosure allows you to transfer the property voluntarily to the lender, and the assumption allows a qualified buyer to assume your mortgage and pay the mortgage payments.

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A bankruptcy filing should only be considered as a last resort measure. If you have exhausted all other possibilities, your minimum payments are no longer within your means and you are already defaulted in a few payments or if you have lost your income you are no longer able to repay your debts, then it is time to consider talking to a bankruptcy attorney and have the bankruptcy chapters explained. Any attorney that specializes in bankruptcy law will be able to offer you a free consultation to have all your bankruptcy questions answered and explain the process in detail and let you know what is it that you can expect and whether this is a viable option for you or not. There are basically two types of bankruptcy for an individual:
-Chapter 7 Bankruptcy
A Chapter 7 is when an individual can not repay his or her debts and asks a federal court to grant them a Chapter 7 discharge. Under a Chapter 7, all of your unsecured debt will be wiped clean while your secured debt can be dealt with by liquidating some of your assets. For example, if you have a debt from a Best Buy card, that is secured debt and you may be asked to return the TV or whatever other appliance you bought with it. While this is not common practice, it can happen. Sometimes the creditor will offer you to settle for pennies on the dollar and let’s say that you owe $1000 on that secured debt card, probably the merchant will offer you to settle for $250. Otherwise, this debt gets wiped with all other debts.
-Chapter 13 Bankruptcy
This is also known as the Wage Earners Bankruptcy. Under a Chapter 13, the court analyzes all your income and expenses and determines how much money leftover you have each month. This money is used to repay a portion of your debt. Typically the court will order a repayment plan of 3 – 5 years. At the end of such period, all unpaid portion of your debt will be wiped clean.

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