How to Prevent Foreclosure When Struggling to Pay Your Mortgage

When you cannot continue making your loan repayments, lenders and banks will consider selling the asset you had registered as collateral, such as a home. 

There are, however, steps that can help you prevent foreclosure from happening. Below are the hints that you need to consider.

Request for a Loan Modification

When you are stuck on repaying your mortgage loan, one thing you can do is negotiate with your lender. The negotiation will help you reduce the loan terms that you had agreed upon when signing the agreement. 

When requesting a loan modification, you want to either reduce the monthly interest rate or request an extension of your loan term. It, therefore, ensures that you do not struggle to pay for the remaining loan.

Forbearance Agreement

You are eligible to enter this agreement only when you are facing financial constraints on paying the loan. For example, it could be a medical emergency or sudden income reduction. 

You will, therefore, need to prove to your lender the situation that you are currently in, as this will increase your chances of the forbearance is granted. During this period, you should regain your financial stability hence can, after that, pay for the mortgage loan without trouble.

File for Bankruptcy

By filing for bankruptcy, you will be delaying the foreclosure process. You could either file for chapter 13 or chapter 7 bankruptcy. 

To know which is best for your current financial position, it would be best that you consult with a bankruptcy attorney. However, you should note that the lender has the authority to get full payment for the mortgage loan if your request for bankruptcy is suspended. 

Due to this legal move, you will have created a negative credit score, which means that you will not qualify for refinancing.

Consider a Short Sale

When you have considered all the available options yet are not working to your benefit, selling your home is the last resort. You will have to sell the lender your house even though it does not cover the entire outstanding balance. 

Before you proceed with this option, it would be best that you consult with your lender to know whether they agree with your plan.

To ensure that you do not get into this situation, it would help if you do not accumulate your debt. However, if it is inevitable, ensure to go through the options above to know which would be helpful to you.

How to Recover After Filing for Bankruptcy

The decision to file for bankruptcy isn’t an easy one. In many situations, it’s the best option, but that doesn’t mean it will be easy. After you file, you’ll need to work to fix your credit and bring your financial situation back into a healthy balance.

Get Comfortable With Your Credit Report

Monitoring your credit will be important following a declaration of bankruptcy. You’ll want to make sure the bankruptcy effectively removed all debt. Otherwise, it could continue to affect your credit score. Look over the report at least once a month.

Start Building Credit

To develop a healthy relationship with your finances, you’ll need to begin responsibly using credit. A recent bankruptcy will limit your options, but you should be able to get a secured credit card. 

This type of card allows you to use your own money as collateral, removing any risk on the part of the lender. The collateral is usually a few hundred dollars. Having it will allow you to practice using a reasonable amount of credit and then paying off the balance each month. 

Always keep the balance low as this is part of what will determine your new credit score. Start with one line of credit for now, and slowly build over time. You don’t want to add too many new accounts at once. It lowers your score.

Consider a Bankruptcy Attorney

Bankruptcy law can be confusing. A good bankruptcy attorney can guide you through the process and can help guide you through the next steps. Along with helping you decide what type of bankruptcy filing is best, the attorney will also handle calls to creditors and ensure you file all paperwork correctly.

Practice Good Behaviors

Bankruptcy provides a fresh start, but it’ll be up to you to make use of it. If you continue to make the same financial mistakes, you’ll end up back in a bad situation or possibly even be worse off than before. 

Be sure to pay all bills on time, follow a budget, and live within or even below your means. The more money you can put in savings, the less likely you are to go further into debt in the event of an emergency.

Complete recovery from bankruptcy isn’t easy. At times, it can feel impossible. However, with hard work, dedication, and a lot of patience, you can learn a new financial skillset and move forward into a much better future.

Factors to Consider While Filing Bankruptcy

Bankruptcy is one word that we all fear about. Debt is stressful and overwhelming experience for anyone and a pure hell that have gone through. The most hazardous is when these debts start piling up and collection begins to call in; it is like living on the edge of financial hardships. Rather than keeping your debts and overhead expenses piling and finally that you come broke, it is better to file a bankruptcy before that.

In present economic situation, filing a bankruptcy is common thing, though for those who are filing are under pressure of numerous things, questioning whether they have head towards the right step or not.

Also, they have a fear whether they will be able to get back their life on track or not. There are certain factors to consider while filing bankruptcy and instead filing it yourself it is recommended that you hire an expertise help.

The reason of hiring an attorney for filing bankruptcy is every country/state has different norms to follow and has designed the bankruptcy law similar to that. It is difficult to know and follow these laws, also with time they are changed which makes grim to know the latest update thus, employing attorney sounds good.

Below mentioned are some of the factors to consider while filing bankruptcy such as:

First Thing First, Are You Ready For This: It is an important decision that people take time in taking into consideration. Determining to file for the bankruptcy doesn’t mean one doesn’t have weighed its pros and cons. Also, it is life altering matter, if not bankruptcy, through debt negotiation has also proved to be effective in resolving debt issues.

Your Assets Might Be At Risk: Debt crisis can lead to all types of consequences; some of them make it worse than others. When you default on a secured debt, such as car loan or mortgage those assets automatically turns into the risk of liquidation. Filing for the bankruptcy can help you regain the possession of your assets or can prevent a foreclosure. This is an actual benefit that people find appealing in bankruptcy process. When comparing the traditional debt negotiation, bankruptcy places an instant hold on any seizure, garnishment orders or lawsuits. This lets you have enough time to resolve your debts without worrying about your valuable possessions.

Debts Are Overwhelming: People most of the times misunderstood about the entire filing bankruptcy procedure, they think that those who file bankruptcy are overwhelmed by their debts. However, it is not always the same scenario with missed payments and tight financial condition it is an occasional concern and doesn’t necessarily suggest that you are a candidate for filing bankruptcy. If your debts majorly comprises of student loans, domestic expenses, taxes and such like then you are less likely to file bankruptcy since these kinds of debts rarely qualify.

Have You Reviewed Your Options? Filing for the bankruptcy could be a great tool during your financial hardships, not a first choice that you at the most consider. Though the entire procedure is time consuming, and involves attention from legal avenues. Also, know that not every time you are saved from the legalities there are always good as well as bad side and depending on the case the court approves the filing if not entirely but partial. It is better that you consult an attorney and let him/her do the job.

It is necessary that you talk openly with your attorney, as he/she would be the only person that would be fighting for you and aiding your financial crisis as much as possible. Lastly, know that filing bankruptcy is not about absolutely about how bad your past financial records were, but how efficiently you will be managing your financial undertakings after it.