Follow a Plan
Priority #1 is attacking your problem head on and requires that you follow a plan. Choose 1 of the 2 following plans based on your goals.
To keep your home, follow the following 6 step plan:
1.) Avoid scams, foreclosure prevention companies, and foreclosure loans.
2.) Make sure you have a stable source of income (retirement or employment). If you cannot afford to make the payments, you cannot keep your home.
3.) If you can afford to pay the total default amount you are behind all at once, request a reinstatement letter from your lender. After you receive this letter (and only after you receive this letter), make the payment. Stay on top of it and make sure that your mortgage is brought current.
4.) If you cannot afford to have your mortgage reinstated, determine if you qualify for any of the available Government Programs or the New Foreclosure Relief Plan.
5.) If you are not qualified for a government program or the new foreclosure relief plan, and you cannot afford to pay the total default amount, you will want to negotiate a repayment plan, forbearance plan, or loan modification plan. Remember… do not waste your lenders time if you do not have the money (gainfully employed). In this case, you are far better off finding a way to get rid of the house.
If you would rather not negotiate on your own, a housing counselor can negotiate on your behalf.
6.) If your lender is not receptive and you have a steady stream of income, Chapter 13 Bankruptcy is your last option. The court will force your lender to accept a repayment plan that fits your budget. While there are do-it-yourself bankruptcy kits available. You will be far better off going to an experienced bankruptcy attorney to handle your case.
Costs can run anywhere from $2000.00 on up, though some will offer to do it for much less. There is a reason they are charging less – They may be moonlighting or desperate for business. The new bankruptcy law is complicated and an experienced knowledgeable bankruptcy attorney is what you need, especially when your home is on the line.
DO NOT TRY TO SAVE A BUCK WHEN HIRING A BANKRUPTCY ATTORNEY; YOU WILL GET WHAT YOU PAY FOR.
To get rid of your home, follow the following 5 step plan:
1.) Determine your timeline. (Refer to the Foreclosure Process and Timeline for help)
2.) Determine if you have equity in the home.
3.) If you have time, equity, and you can afford all the associated costs of selling your home in addition to paying your lender the full amount you owe, you should try to sell your home conventionally using a realtor (See the “Resource Rolodex” to help you find a realtor).
The goal is to sell your home, even if it means losing some or even all of your equity. Your credit report will look far better with a “mortgage paid in full” on it rather than a Foreclosure.
4.) If you do not have time, equity, or cannot sell your home for a price that will allow you to pay your mortgage in full, you can find out if your lender will accept a “Deed in Lieu of Foreclosure.” Remember, the likely hood they will is low. There also may be some tax ramifications.
5.) If the Deed in Lieu fails, your next option is to ask your lender to accept a short sale.
You should not, under any circumstances, attempt to do this on your own!
A professional will have far better success negotiating on your behalf. Therefore, contacting an experienced investor to help you with your short sale will be a better approach. Investors have both contacts and money which are instrumental in negotiating a successful and fast short sale agreement with your lender. In addition, an experienced investor will be able to close on your home fast once a short sale agreement has been – getting you out with your credit intact.
6.) Your last and final option is to walk away from the property.
This of course is the worst possible action you can take.
If you find yourself in this position and have the money to pay your mortgage, but don’t want to keep the home, you may want to consider filing chapter 13 bankruptcy to buy you time to sell your home. Once your home is sold and the mortgage is paid off, the bankruptcy will be discharged. Even though a bankruptcy looks bad on your credit report, it is far better than a foreclosure.
