One of the sad side effects of facing bankruptcy, is watching the things around you being taken away. A common aspect of bankruptcy, or leading up to bankruptcy, can be a foreclosure. Losing your home in a foreclosure is not only an incredibly stressful process, but it also damages your credit, making it difficult for you to gain a mortgage in the future. It can also result in tax liabilities with the IRS. If you are facing foreclosure, is there anything that you can do to stop the process and avoid losing your home?
Catch up on the mortgage
This may not be a possibility. But remember, a foreclosure is inconvenient to your lender as well as to you, so if you are able to make up the missed payments and get caught up, you can avoid losing the house. Get in contact with your lender to get the total late amount that is due, and to find out what your options are.
Get a loan modification
Another option is to ask your lender for a loan modification. This could be something like modifying your loan to make the monthly payments lower for you, by lengthening the loan or by changing the interest rate. In some cases, the payments that you owe can be added back into the new payment schedule.
Get permission to do a short sale
Talk to you lender and see if they will allow a short sale. This is when you sell your home for less than what you owe on your mortgage in order to avoid a foreclosure. In most cases, the lender will cancel the remaining balance leftover after the short sale. This allows them to actually make back the majority of their money, which they may not do in a foreclosure. You will still have to employ the services of a real estate agent and an attorney to do the sale, but you will avoid a foreclosure.
Enter into a forbearance agreement
If you cannot pay in full, ask your lender about a forbearance agreement. This will allow you to halt the payments and stop the foreclosure. Often, you will then make different payment arrangements to get back on track. Ask your lender to explain your options, and have all necessary forms sent to your home.