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:: 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
www.super-mortgages.com who provides money-saving tips on
mortgages. His other articles include interesting topics such as
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