Posted on: 16 May 2016
One of the difficult decisions you have to make when you are facing a foreclosure is whether or not you want to fight for the home or walk away. Both options can have financial consequences that could have a long-term impact on your future. If you are unsure of what you should do, here are some options and the possible consequences.
What If You Want To Keep the Home?
If you want to keep the home, you can attempt to negotiate with the lender. However, if your home has reached the stage at which a foreclosure has been filed, your lender might be unwilling to negotiate.
If the negotiations are not possible, you can file for bankruptcy. A bankruptcy filing stops whatever actions the lender was planning to take and buys you time to explore other options. Even if a foreclosure has already been filed, the lender cannot move forward until the court says otherwise.
While you are protected by the court, you can attempt to re-negotiate with the lender. There are also government programs available that can help you in the negotiation process with your lender. For instance, the Home Affordable Modification Program, or HAMP, helps to lower your monthly payments and offers a forbearance that gives you time to pay the arrears on the mortgage.
What If You Want to Walk Away?
If you do not want to fight for the home, the lender could go through with the sale. Unfortunately, the sale might not be the end of the situation. If the lender is unable to sell the home for the amount needed to cover the remaining balance on your loan, you could be hit with a deficiency judgment.
A deficiency judgment occurs when the lender files a lawsuit against you for the remaining loan balance after the foreclosure sale. If you do not pay back the funds, the lender could take actions, such as wage garnishment, against you.
If you are unable to pay the judgment, bankruptcy could help. When you file for a Chapter 7 bankruptcy, debts, such as the deficiency judgment, are usually discharged. In other words, you would not be responsible for paying the lender the judgment.
Bankruptcy is an option that can not only be helpful in deciding what happens with your home, but also in other financial matters. Consult with a bankruptcy attorney like those found at Shoemaker & Dart P.S. Inc to further explore the benefits of bankruptcy.Share