Ammerman Bankruptcy Solutions
Toll Free: (301) 655-0606
Phone: (301) 655-0606

How to stop a foreclosure and avoid homelessness

Many never think that homelessness might affect them. However, if you fall behind on your mortgage payments, being homeless may now be on your radar along with a realization of just how easily the average person can end up on the streets.

For example, twin brothers in another state have endured many things, including countless struggles after the death of their mother. The brothers took out a loan for a roof repair not understanding that the payments could skyrocket on the adjustable rate mortgage if interest rates climbed. The brothers soon were unable to keep up with the payments. The bank foreclosed on the property that has been in their family for decades.

You are not out of options

Your situation may be similar. Many households manage their budget fairly well until they meet an unexpected change in circumstances. For example, a job loss, divorce, medical emergency or major home repair may tip the carefully held balance of income and debt. If you have fallen behind on your mortgage, you may already have received a Notice of Default. This means the bank intends to foreclose on your home.

The temptation for many is to ignore the situation, especially if they know there is no way to catch up. However, this may be the worst thing you can do. There are still options you can take to avoid foreclosure and perhaps save your home, even if you have already received the Notice of Default from your lender. Consider taking one of these steps:

  • Contact the lender right away. The bank may give you a grace period, adjust your loan or offer other options to ease your burden. Some lenders may even forgive the delinquent debt, though this is rare.
  • Deed the home back to the lender. This is essentially a foreclosure without the suspense, and it may have the same impact on your credit score. However, you may be able to remain in the home until you can afford to move.
  • Sell the house. This may entail negotiating a short sale with your lender if you owe more than the value of the house. Short sales are time consuming and often disappointing, but they may not hurt your credit score like a foreclosure.

Another option to consider is bankruptcy. If you are struggling with your mortgage, chances are you are behind on other debts, too. Perhaps you have maxed out your credit cards or are fearful that your car will soon be repossessed. Filing bankruptcy may relieve you of many of those burdens and give you a fresh financial start. Most importantly, seeking debt relief through bankruptcy will halt any foreclosure proceedings, perhaps allowing you the peace of mind of knowing you will not be losing your home.

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