When someone is facing a difficult financial situation, one of the main concerns that person may have is losing his or her home. If a person is not able to pay day-to-day expenses, one of the biggest bills that will go unpaid is the mortgage bill. However, if the mortgage is not paid on time for more than 180 days, the lender may decide to proceed with a foreclosure action. The key is to respond quickly to avoid losing your home through foreclosure.
- Never Ignore Notices
The lender will likely have sent multiple notices regarding missed mortgage payments. The first notice of missed payment usually involves a late fee and a subsequent hit to the person’s credit score. After that point, the consequences get much harsher, and by the time a third missed payment has passed, the bank or lender will take legal action to collect payment by foreclosing on the property starting first with a Notice of Delinquency and following with formal foreclosure proceedings.
The worst thing that can happen is to ignore the notices as they are received. The further behind someone becomes on payments, the more likely it is that the foreclosure will go through and he or she will lose the home.
- Work with the Lender
Foreclosures are expensive for all involved. Even lenders would prefer to avoid them, if possible, since they must hire legal counsel to handle the proceedings. Many times, if caught early, the lender may be willing to work out a plan with the homeowner directly to avoid taking this route. As soon as that first payment is missed, the homeowner should reach out to the lender to see if different payment options are available.
Some lenders will work with the homeowner on a forbearance plan, which is a payment plan that either suspends payments until the homeowner is current on his or her debt or will ease up on the payments to allow the borrower to catch up. These types of plans are particularly useful if the financial hardship is temporary in nature. The borrower may also be able to request a partial claim, which allows the lender to advance funds to the borrower in the form of a promissory note. However, this is only used if the person is not delinquent for more than 12 months. A partial claim basically works as a second mortgage behind the first mortgage and is not due until the first mortgage is either paid off or the home is sold. Occasionally, the borrower may be able to get a loan modification through a program like the Home Affordable Modification Program (HAMP), which is offered through the government.
- Consider Bankruptcy
Many times, it is not a matter of simply catching up on mortgage payments that will allow the borrower to get on the right financial footing. He or she may be in such a stressful financial situation that bankruptcy may be the best available option, especially if the borrower is drowning in unsecured credit card debt and medical bills. If the person proceeds with a Chapter 13 bankruptcy, the bankruptcy trustee will work with him or her so that the home can be kept, payments can hopefully be caught up, and all qualifying, unsecured debt discharged, allowing the individual to get back on his or her feet. While a bankruptcy does stay on the person’s credit score for a period of time, it also allows the individual to escape the burden of debt that he or she would continue to carry even after losing his or her home in a foreclosure. A bankruptcy attorney can work with the individual and review his or her situation to see if this strategy is best for avoiding foreclosure. The key, however, is to not wait until it is too late and the person is far behind on payments or foreclosure proceedings have already begun.
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Choosing the right attorney can make the difference between keeping your home or losing it in foreclosure. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com