Can You Do Anything to Stop Real Estate Foreclosures in Progress?
Unfortunately, it’s no surprise if you’re currently dealing with the foreclosure process. It happens to so many people that you find people everywhere that are currently experiencing the same thing. After all, the current foreclosure rate is now on the rise.
Real estate foreclosures might seem intimidating, but you aren’t out of options. Keep reading to learn what you can do to stop foreclosure processes that have already started.
Get Your Finances in Order
Even if you’re behind on your mortgage because of money issues, that doesn’t mean you can’t get back on your feet. Bank foreclosures take time to process. You can put yourself in a better position if you regain your financial standing during the foreclosure process.
If you can prove to your lender that you are financially capable of making your monthly payments, they may reverse the foreclosure process. It’s a lot of work to foreclose on a property and then sell it on the market. If you can convince your lender that you can make payments in the future, they may be willing to give you a chance to catch up on your mortgage.
However, you’ll likely need to pay what you owe in a lump sum payment. Whether it’s selling your possessions, renting out a room, or getting another job, find a way to gather the cash to get current on your loan.
File for Bankruptcy
If you’re having trouble making payments on your home, filing for bankruptcy may help. Bankruptcy exemptions protect the equity in your home from being seized by creditors. If you file for bankruptcy, it puts a halt to foreclosure proceedings.
However, you must ensure that your lender receives notice of the filing, or they may continue with the foreclosure process despite the bankruptcy proceeding. You’ll also need to file a notice of the bankruptcy petition with the court. Using a court filing service, which is available for a small fee, can make things easier for you.
In most cases, Chapter 13 bankruptcy will work best. It restarts your mortgage payments with either a repayment plan or a reduction in your principal. If you can afford to pay your mortgage, Chapter 13 will allow you to do so over time.
If you cannot pay your mortgage, Chapter 13 allows you to declare bankruptcy on just this one debt. This chapter protects the equity in your home with an exemption that’s equivalent to the state median home value.
Apply for a Loan Modification
If your lender is foreclosing on your home and you’re having trouble making payments, one of your best options is to apply for a loan modification.
A loan modification might be an option if the foreclosure has caused major financial hardship for you or your family. For instance, if one of your children needs surgery that costs thousands of dollars, it could be wise to apply for a loan modification at the time of the surgery.
Remember, though, that getting a loan modification can take several months to get approved. However, some states prohibit dual tracking with mortgages. This means that the bank can’t start or continue a foreclosure while you’re applying for a loan modification.
Also, keep in mind that your lender might be more willing to consider your loan modification if you can continue paying down what you owe to bring it more current.
Make a Short Sale
A short sale transfers the debt for the house to the bank, assuming that you’ll sell the house at a later date. While it looks like you are paying off your loan, this arrangement allows you to avoid foreclosure. You can continue making payments on your property for as long as necessary and then legally sell the property so that the process of foreclosure stops forever.
A short sale is attractive to lenders because it’s easier for them in the long run. Your lenders will turn around and try to sell when the foreclosure process completes anyway, so going down this route saves them both time and money.
However, your lender may want you to cover the difference between your sale price and the amount you still owe on the home. The good news is that this amount will likely be much lower than you would otherwise owe.
Talk to a Lawyer
Even if you believe you don’t have many options, it’s always smart to talk to a foreclosure attorney to help stop foreclosure from happening. An attorney might be able to give you advice on what your other options are or even advice on how to proceed if you decide not to fight the foreclosure.
However, it’s essential to know what you can do ahead of time so you don’t waste money by hiring an attorney who doesn’t have prior experience in this area of law. Consider consulting with a free legal aid service first to see if they can help.
If you decide to hire an attorney, they can also look at any improper actions your lender takes during the foreclosure process. For example, some lenders will use confusing language in their notices or not correctly follow protocol regarding notice or required documentation.
Real Estate Foreclosures Aren’t Always the End
While you might not be able to save your home using the tips above, that doesn’t mean you shouldn’t give it a try. Exhaust all your options when dealing with real estate foreclosures, so you have the best chance possible to save your home.
If the information in this post was helpful, head back to the blog to find other posts that will help you deal with life events.