Stopping Mortgage Foreclosure

Some Ways to Stop Or Delay Foreclosure

My house is about to be foreclosed, what can I do to stop it.

Can I file for Chapter 13?

Abdul

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You can stop a foreclosure by filing a Chapter 13 Bankruptcy petition before the foreclosure sale date.

If time is of the essence, contact a lawyer and see if you need to go through the required counseling, since you are not seeking a Chapter 7 discharge.

If you do need to go through with counseling, get it done quickly.

The bankruptcy filing should halt the foreclosure action and you will be placed on a repayment plan to make your payments current.

The lawyer can also help you work with the bank to modify your mortgage or, at least, delay foreclosure.

Other ways to avoid foreclosure would be to apply for mortgage assistance from HUD – the federal Housing and Urban Development Agency.

Your bank might delay proceedings if it knows HUD is reviewing your case. Ask your local creditor counselor or do a internet search for HUD approved counselors.

Your bank probably doesn’t want to foreclose. They would rather get their money back. Have you tried to approach the bank and see if you can work something out?

For example, you can ask for a reinstatement of the loan if you can promise a make a lump sum payment to make your loan current by a specific date.

If that is not possible, you can ask the bank for forbearance. You will be allowed to delay payments for a certain period with the understanding that you will be taking some steps to either pay the loan or make your payments current.

You can also try to set up a repayment plan if you have the ability to start paying the mortgage again. In this case, you will have to pay a little bit extra each month until you catch up.

You can also ask the bank to delay foreclosure to give you a chance to sell the house yourself. You can also try to tender your deed to the bank in lieu of foreclosure, although you will lose whatever equity you have.

You can also try to renegotiate, or refinance, the mortgage, if you can make payments at a lower amount. You might be able to either lower the interest rate or extend the term of the loan or both.

The bank will have to be satisfied that you can meet the new, lower, payment obligations.

If you mortgage was insured by the FHA or VA, contact them to see if they can help.

Otherwise bankruptcy might be your only option.

Please read the May 2007 update of the article Avoiding Foreclosure. It contains valuable new information on the housing crisis and what lenders are doing in attempt to avoid a major glut of foreclosed homes throughout the country.

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