How to Stop Foreclosure Before You Lose Your Home
There is nothing more devastating than facing a home foreclosure. It is the ultimate loss of dignity, and it leads not only to financial troubles but to depression, anger, and frustration. Most people facing foreclosures are good, responsible people who have either fallen on tough economic times or simply gotten behind in their payments. Either way, they want a foreclosure stop, and they want it fast.
If that describes you, here are some steps you can take to become more knowledgeable about, prevent, and survive foreclosures.
How to prevent foreclosure
If you aren't facing foreclosure yet but you know it's a distinct possibility, the worst thing you can possibly do is nothing. If you bury your head in the sand, the next thing you know, you'll be receiving a foreclosure notice -- and then it really will be too late.
As soon as you realize you're not going to be able to make your mortgage payments, contact the bank. Explain your situation. Believe it or not, banks don't like foreclosures very much either, and they're often willing to work with you to reduce your payments. They may also be able to refinance your loan.
Alternatively, start looking for ways to budget, save money, or otherwise salvage your financial situation. As a very last resort, you can file for bankruptcy. Usually your house will be considered a protected asset when you declare bankruptcy. However, do keep this as a last resort: a bankruptcy stays on your credit record for seven years and can cause a lot of turmoil in your life.
In a worst case scenario, you may have to make a decision about which you'd rather give up: your house or your car. This can be a difficult decision, but it's better than having one taken from you, in which case you get nothing.
The same may be true of your home. If it comes to a point where you have to choose between foreclosure and downsizing, keep in mind that in case of a foreclosure, you will receive nothing. If you sell your home and buy a smaller one, you will reduce your mortgage payments and still have a place to live. These are tough choices, but sometimes you have to make them.
How to stop foreclosure
Once you receive a notice of foreclosure, you have to act fast. You have very little time if the bank has actually initiated proceedings against you. Immediately contact whoever the foreclosure names (usually your bank) and follow the same steps above. Make it clear that you want to pay your mortgage and are willing to work with them to make the foreclosure stop.
If that doesn't work, immediately contact a lawyer and see what they can do. In some cases, they may not be able to help, but sometimes they can. Either way, the easiest way to stop foreclosure is to prevent it!