Stop Foreclosure

Using Smart Financial Management to Stop Foreclosure

Article By: Gary Carraghan

If you’re a homeowner facing the threat of bankruptcy in the near or ever distant future, the single most important thing you can do to protect your assets is to stop foreclosure. The loss of a job, cuts in hours or overtime, retirement, the death or illness of a family member, and several other factors can threaten your assets as a homeowner, but taking careful and deliberate steps in dealing with your creditor can potentially stop the home foreclosure process and get out of debt altogether. 

As simple as it sounds, many people facing imminent or even distant foreclosure proceeding fail to do the simplest thing possible to avoid the process; contacting your mortgage lender as soon as financial problems arise which would prevent you from paying all or a portion of your mortgage on time. Surprisingly, this happens more often than not. Most of us would feel embarrassed faced with such circumstance and don’t even thing to let the bank know about whatever situation may have befallen us for fear that they will attempt to expedite the collection process and take as much as possible as quickly as possible; leaving us impossibly in debt and facing no other option than to declare bankruptcy. In fact, this assumption could not be further from the truth, and is the first mistake most make faced with this situation. Far from wanting to harm their customers, creditors and banks very much want to assist their customers in regaining financial control over their life. It is, after all, in their best interest to be receiving payments from you in some regular variety, not possible should you decide to declare bankruptcy. If worse comes to work, the bank has the right to foreclose on your property, but this too is a last resort for the banks if for no other reason than the unwanted obligation it ties them to. When the bank forecloses on your home it must then either sell it to a private buyer or auction it off. Both processes are expensive and time consuming. 

Most every bank and the majority of private lenders have programs available to their clients designed to keep them in their homes. Again, though, these payment plans are usually only available to debtors who are two payments or less behind. The more behind you are on your payments to the bank; that is, how long you’ve been in default, the less options you have. 

Many Americans are unable to save for their retirement because they are over burdened by debt, the majority of which has been built up over time as a result of high interest credit card debt. No doubt they all work hard for their money (in fact, the majority earn more than enough to live comfortably) yet some cannot qualify for mortgage financing because their debt to income ratio is too high. Unfortunately for most people, much of their hard earned dollars are consumed paying credit card debt that never seems to disappear. This sort of compounding debt can easily spiral out of control and for many hardworking Americans can result in foreclosure of your assets. 

There are many services being promoted which promise complete elimination or drastic reconsolidation of your credit card debts, mortgages, auto loans and even student loans. It’s wise to exercise extreme caution prior to dealing with such agencies and organizations. As with any financial situation, due diligence should be preformed in order to eliminate the possibilities of being taken advantage of. These programs often do more harm than good to their customers and, while they may be able to lower your monthly payments, they will ultimately raise the interest paid to their organization drastically over time. Debt elimination is just one alternative to dealing with the problem of debt. 

Instead of engaging in a confrontational mortgage elimination program, many organizations offer services that may well work more efficiently with your bank to help you eliminate mortgage payments by paying off the mortgage using funds generated from a new promissory note. Though it helps in the process, you may not even need a mortgage to participate in such programs. They can be used to pay-off auto loans, student loans, medical bills, credit card debts, unsecured loans, and any other kind of debt, secured or otherwise, imaginable. 

Put as simply as possible: failing to pay any of your debts can seriously affect your credit rating. Whenever possible, any income available after paying for food and utilities should be used to pay your monthly mortgage payments. If your employment income has been stopped or reduced, first consider eliminating or reducing your other expenses (such as dining out, entertainment, cable, second automobile, or even telephone services). Take any responsible action that will save cash – you’ll be very thankful you did. 

There may come a time prior to foreclosure when it may become all too apparent to you that you can no longer afford to keep your house. Typically in this situation your lender will usually agree to give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to obtain the services of a real estate professional who can aggressively and successfully market the property in the short timeframe allowed to find a qualified buyer. 

If the property’s sales value is not sufficient to pay the loan in full, a second sales option should be available to you; your lender may be able to accept less than the full amount owed as settlement for the account. This option can also include a period of time to allow your real estate agent to market the property and find a qualified purchaser. Monetary assistance may be available to satisfy additional lien holders and/or help toward paying a few moving costs. 

Explore every reasonable alternative to avoid losing your home but beware of scams. Keep an eye out for equity skimming (a buyer offering to repay the mortgage or sell the property if you sign over the deed and move out) and phony counseling agencies: offer counseling for a fee when it is often given at no charge. Remember that information is your best defense against becoming a victim of predatory lending especially for a desperate homeowner.  

The foreclosure process can be among the most embarrassing financial situations you’ll ever face. Keeping in mind these few helpful hints can not only make the process bearable, but tip the scales in your favor.

About the Author

Gary Carraghan is a successful author and regular contributor to who provides money-saving tips on mortgages. His other articles include interesting topics such as


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