What to do when Faced with Foreclosure

They promised you help but the feds haven’t come through for you. If you are still facing foreclosure and don’t know where to turn there are options. If you can’t make your payments and are unable to refinance your home because the value dropped, then foreclosure is a real possibility to you.

All of the states have various laws regarding foreclosure, but once you miss that first payment your creditor will start the foreclosure process about three to six months later. But if you are determined to keep your home you can do it.

The federal government gave everyone hope but their guidelines left a lot of people out in the cold if they didn’t fit into their forms and boxes. The Federal Housing Administration set up a program to help homeowners. This program is called the Hope for Homeowners program. It was created to help homeowners who were facing foreclosure the ability to refinance.

The Hope Now coalition introduced a program to lower homeowners payments if the homeowner had missed three or more payments and still lived in their home. Another requirement was they could not have filed bankruptcy.

If you are a veteran or a member of the military you have special rights that protect you from foreclosure. The Servicemembers Civil Relief Act protects your rights regarding your homeowners interest and foreclosure process.

You can ask your lender to modify your loan terms if you don’t qualify for any help in these programs. You could also file Chapter 13 bankruptcy which allows you to keep your home you are living in and repay your debts. Chapter 13 will cost you a few thousand dollars in attorney fees.

Chapter 7 is an option if you just can’t afford your home, but you’ll be forced to sell your home to repay your creditors. So Chapter 7 is only an option if you don’t mind losing your home and starting from scratch. Speak to a financial counselor they will help you decide if this is your best option.

If you find yourself in trouble and need to speak to your mortgage company do not hesitate to call them. The instant you know you are in over your head call them. Let them know before you miss the first payment what is going on and what your intentions are so they know you are a responsible person. Your creditor might even have a solution for you.

If your problem is related to a temporary decrease or loss in your income creditors will usually set you up on a repayment plan. When your income is returned to normal you’ll pay extra to make up the difference. You might even consider a loan modification to pay over a longer period of time with a smaller payment.

Other things to consider when thinking about how you will handle your home and debts are credit and taxes. If you file bankruptcy it will obviously affect your ability to obtain credit for several years. Some creditors who settle their debts for less money will send you a tax form and count that money they adjusted of as money you earned. You will then have to pay income tax on the money you didn’t have to repay. Be certain to seek legal advice or financial advice if you decide to settle debts, file bankruptcy, or have a short sale on your home.