Homeownership instills people with a sense of financial security and pride. The thought of losing your home may make you feel vulnerable or panicky. Unfortunately, you only have to fall behind by a few weeks for your equity to be vulnerable.
Depending on the terms of your mortgage, a couple of missed payments may be all that it takes for your lender to initiate foreclosure proceedings. If you have received notice from your lender that they may pursue foreclosure on your mortgage, you have multiple different ways to potentially respond that still might allow you to keep the house.
Try to negotiate with your lender
Before you fall so far behind that catching up becomes an impossibility, you may need to consider renegotiating the terms of your mortgage with the lender. They might willingly let you add those missed payments to the end of the mortgage without needing to make them up right now.
You could potentially secure a lower interest rate, a lower monthly payment or a longer repayment period. Restructuring the mortgage could help you make your payments every month more easily.
Defend against the foreclosure in court
Foreclosure proceedings involve the civil courts. If you can prove that your lender violated the terms of your mortgage agreement or that you have made payments that should resolve the issue, defending against the foreclosure in court may be an option. A careful review of your finances and your mortgage notes will be necessary to decide the right strategy for an in-court foreclosure defense.
Consider filing for Chapter 13 bankruptcy
If you are on the cusp of foreclosure and don’t have time to consider another approach, filing for bankruptcy can be an emergency solution to an impending foreclosure. You receive an automatic stay that will stop collection activity, including foreclosure proceedings in court.
In a Chapter 13 bankruptcy, you will have the option of working with your lender to renegotiate your mortgage, possibly making it easier for you to keep things in good standing in the future.
Those who don’t want to keep their house could negotiate a short sale for the property as well. Considering all of your options can help you decide on the right foreclosure defense in your current situation.