How to Stop Foreclosure
How to Stop Foreclosure
Learning how to stop foreclosure may save you a great deal of money, keep your home from being foreclosed upon, and help you avoid the damaging affects to credit ratings associated with foreclosure. It is essential to figure out how to stop foreclosure as early as possible if you begin having trouble making your monthly mortgage payments. Some techniques on how to stop foreclosure may help you stay in your home, while others may require you to leave your home.
Several foreclosure options may be available to help homeowners deal with foreclosure. Depending upon the seriousness of the homeowner’s situation, the homeowner may or may not be able to keep the home. Factors that may affect whether or not a homeowner can keep the home may include:
- Length of time spent in delinquency
- Total outstanding balance on the mortgage loan
- Amount of equity established in the home
- The current financial situation of the homeowner
Knowledge of the foreclosure process and potential foreclosure options can be two of the most empowering tools for homeowners when dealing with foreclosure. Homeowners should consider learning as much as possible about how the foreclosure process works in their local area and available foreclosure defense options. This may help prepare distressed homeowners to have the best opportunity at stopping foreclosure and/or finding a favorable alternative.
How To Stop Foreclosure and Remain in Your Home
These strategies on how to stop foreclosure may allow you stay in your home while stopping foreclosure:
- Mortgage Modification – A mortgage modification or loan modification occurs when lenders negotiate with debtors to change the terms of a loan outside the original agreement. This can include reduced mortgage payments, reduced principal, or even lengthening the term of a loan.
- Mortgage Forbearance – Mortgage forbearance occurs when a mortgage lender agrees to delay foreclosure proceedings and suspend or reduce mortgage payments until their debtor brings the loan current. This can be a good strategy for homeowners are only experiencing a short-term financial hardship. Forbearance is probably not a good idea for people experiencing a long-term financial hardship as it will only stop foreclosure temporarily.
- Redemption – Redemption occurs when a debtor pays off the entire loan in full. This probably seems like an impossible option for homeowners facing foreclosure, but it can occur when family or friends cosign to refinance the home, or lend their friends/family the money to pay the balance.
- Chapter 13 Bankruptcy – Chapter 13 bankruptcy is a type of reorganization bankruptcy whereby debts are restructured to make monthly payments more affordable. This can be a good option for homeowners who wish to keep their homes, avoid foreclosure, and are able to make regular monthly payments at a reduced rate.
How To Stop Foreclosure and Leave Your Home
These techniques describe how to stop foreclosure, but may require you to leave your home as a result:
- Selling home outright – Selling your home outright can sometimes be very easy and other times very difficult. It is important to consider how much equity you have in the home. If you do not have enough equity in the home to pay off the unpaid mortgage, then selling your home outright may not be the best way to stop foreclosure.
- Short Sale – For a short sale to occur, a homeowner must have an agreement with expressed consent from their mortgage lender. In a short sale, a homeowner sells their home for less than the outstanding balance on their mortgage. The money earned from a short sale is used to pay off a portion of the mortgage balance, and the mortgage lender accepts this as satisfaction of the remaining debt. Homeowners are then released from mortgage debt obligations.
- Deed in Lieu of foreclosure – A deed in lieu of foreclosure occurs when a homeowner in default on their mortgage exchanges the deed to their homes in exchange for a discharge of debt. This can stop foreclosure, and prevent bankruptcy, but homeowner will be required to leave their homes as a result.
- Chapter 7 Bankruptcy – Chapter 7 bankruptcy is a form of liquidation bankruptcy whereby all nonexempt assets are sold to pay back creditors. If a homeowner files for Chapter 7 bankruptcy, all foreclosure proceedings will stop, but they may not be able to keep their homes in certain instances. Some homeowners may be able to keep their homes if they have no equity, but it is important to consult with a bankruptcy attorney as this is not always the case.
These are several common techniques on how to stop foreclosure, but it is always a good idea to consult with a good foreclosure defense attorney before deciding to pursue one of these options.