It starts with past-due notices and continuous calls from your mortgage company. Falling behind on house payments in any environment, let alone during a pandemic, creates stress and uncertainty, particularly when a foreclosure notice is filed.
You should know that filing a foreclosure notice does not mean that you should start packing and moving out of your home. Instead, stay where you are. The fight is only over when the house is sold at auction.
Options exist to resolve a complicated financial problem. They may try to provide a workout plan to reschedule payments or extend the loan. Short sales are also possible to sell your home at a discount before repossession and auction.
Lenders get government checks for running mortgage modification programs. They are not required to modify any loans in these programs and frequently don’t. Some modifications offer terms that will result in the mortgagor never owning their home. Filing a Chapter 13 plan may be a more useful tool for saving the residence. Check with a Bankruptcy Attorney as to which is the best option for you.
Chapter 13 bankruptcy
Upon filing Chapter 13, an automatic stay goes into effect that stalls foreclosure actions, along with any other collections. It can provide you with the time necessary to restructure debts. An assigned bankruptcy trustee serves in a mediator role and works with your mortgagor to repay your mortgage and other delinquent debts.
A filing alone will not stave off your home being auctioned off. You have to show that you intend to catch up on payments, and you have the financial resources to do so. The lengthy process of Chapter 13 bankruptcy can provide much-needed time to secure the finances available to save your home.
The impact of foreclosure on your credit score is measured in years, with mortgagors not even entertaining the option of providing you with another mortgage. To make matters worse, the remaining debt on your home is still your responsibility.