When You Can't Pay Your Mortgage: Tips For Avoiding Foreclosure

Posted on: 18 January 2019

When you experience a change in your financial security, you do everything you can to meet your obligations and pay your bills. However, sometimes the odds are stacked against you, and you no longer can pay your bills and your creditors. Missing payments to your mortgage lender can lead you into deeper financial trouble. 

Most people want to avoid foreclosing on their home at all costs. The first step you need to take if you're experiencing trouble with your finances, especially if you are in danger of losing your house, is to contact a foreclosure attorney. You can follow these tips to help avoid foreclosure. 

1. Be upfront with your mortgage lender. 

Some people think that it's better not to contact their mortgage lender when they have financial problems, because it will only make the bank or lender rush to foreclose. However, lenders don't want your house; they want to get paid the money you owe them. When you succeed, they succeed as well. 

As a result, they will typically try to work with you to keep you from getting too far behind on your payments. Lenders have options in place to help people keep their homes. Once they take possession of a property, it's a liability for them, and selling a foreclosed home is challenging. Banks often lose money on foreclosed properties. 

2. Stay up to date with all correspondence. 

Financial problems often mean a lot of paper mail. You might get medical bills, utility notices, mortgage notices, and letters from credit card companies on a daily basis. To cope, people might not even open these letters, ignoring the problem. However, you should not ignore letters from your mortgage company. They might be sending you important information about the state of your loan, or they might be letting you know what you can to do to get caught up. Even if you don't have the money to pay your monthly mortgage, opening letters and responding to them will only help your case. 

3. Get connected with programs that can help. 

Most states and communities have help available to those who need assistance. Your lawyer will be able to put you in contact with a government representative for free counseling. You might even get a grant to help you meet your obligation. You can also get assistance from privately funded charities. As an experienced foreclosure attorney, your lawyer will have connections that can help you get back on your feet. 

4. Consider consolidating debt. 

If your debt is what is keeping you from meeting your obligations to your mortgage company, you might consider talking to your lawyer about debt consolidation. Your lawyer can negotiate new rates with your creditors or get you in touch with consolidation services that operate for the benefit of the client. 

5. Review all your options, including bankruptcy. 

Finally, you need to consider talking to your lawyer about bankruptcy. Some people avoid the idea of bankruptcy because they don't want the black mark on their credit and financial history. However, if your home is foreclosed on, your credit will still drop, and you'll have a harder time getting another home loan in the future without exceptionally high interest rates. Bankruptcy gives you a path forward for managing your finances, and sometimes it frees up enough cash that you are able to keep your home.

If your home is a significant asset, your lawyer might advise that you sell your house as a method of paying the money you owe, which also helps you avoid foreclosure. If selling is not an option, you can still try to keep your house in bankruptcy if you have negative equity in the home—selling it won't make a difference. 

Don't go through the process of a foreclosure on your own. Talk to a real estate or bankruptcy attorney to help you find the path to greater financial stability.