Can I Prevent Foreclosure of My House? If you own a house, chances are that you have mortgage payments every month. The house is the biggest asset you own, but the mortgage is definitely the biggest debt you have. The way you manage that debt is going to have a great impact on the rest of your life, including your credit score.
So, what happens when you can no longer pay your mortgage every month? The bank is going to want its money, which can mean a foreclosure and forced eviction for you. However, there are some options you have to prevent this.
If Your Debt Isn’t Too Big
If you haven’t gone too far down the rabbit hole, you may be able to get out of it by filing for chapter 7 bankruptcy. Many people are a bit apprehensive when it comes to bankruptcy because it is a big financial decision. However, if you are neck deep in debt, this is a viable option.
Consult a good bankruptcy attorney like https://www.thebklawyers.com/ to help you organize the papers. As soon as you file for Chapter 7 bankruptcy, you can stop the payment of most of your debts, and the banks and creditors cannot collect them because you are protected by the law. After a while, typically three months later, all of those debts can be written off.
Once you have stopped paying off other debts, you should be now able to continue paying your mortgage and you will be able to prevent the foreclosure that looms over you.
If Your Debt Is Relatively High
In cases when you are a bit more behind on your mortgage payments and/or property tax payments, you can ask your bank or another lender to sign a for bearance agreement. In essence, this contract obligates you to try to continually pay what you owe and to create some sort of a payment plan.
In return, the bank will forbear its right to foreclose your house, as long as you hold up your end of the bargain. The bank is not obligated to sign this agreement with you, but they are generally willing to do so. The reason is simple – the bank doesn’t want your house, it is more a problem for them than it is worth. Typically, you will be given about a year to sort out your debts before the bank decides to bring up the foreclosure as an option.
If Your Debt Is Really High
If you realistically cannot make up for missed payments in one year, Chapter 7 is not going to be the right move for you. However, Chapter 13 bankruptcy might be. It can give you as many as five years of break. What’s more, Chapter 13 bankruptcy allows you to dictate the terms of repayment.
Banks generally don’t like when their debtors file for this kind of bankruptcy and will most likely appeal. However, if you can prove that you are able to bring your finances in order by the end of the period you have opted for, the appeal will have no grounds and it will be thrown out. You do, however, need to stick to the payment plan and pay everything back.
No matter what brought you to the unfavorable financial situation and the imminent foreclosure on your house, do not despair. Instead, go through your options and make sure to pick the right one for you.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.