The prospect of losing your home can be so daunting that you may be either paralyzed by anxiety and fail to take action or rashly choose short-term solutions over long-term benefits. Neither option is in your best interests, so sometimes you need help understanding your options during foreclosure and creating a clearer picture.
Alternatives to Foreclosure
Although foreclosure may seem inevitable once you start missing mortgage payments, some alternatives can let you stay in your home. They include:
- Negotiating an agreement with the bank that allows you to include the arrears in your future payments.
- Using the equity in your home to refinance your mortgage, either with your current lender or a new one.
- Seeking a mortgage modification that reduces your interest rate, converts a variable interest rate to a fixed one, or extends the terms of the loan.
- Applying for a special forbearance plan that suspends or reduces your mortgage payments until you are more stable financially
- Coming to a deed in lieu of foreclosure agreement in which you turn the deed over to the lender in exchange for being released from your home loan.
If you contact your lender the moment you realize that you can’t afford your mortgage payments any longer, you may be able to negotiate a solution that works for you and lets you stay in your home.
Effects of a Foreclosure
Foreclosure has several potential effects on your finances and your future. Your credit score can drop up to 160 points after a foreclosure and make it difficult to get new credit, housing, and possibly employment in certain areas. You will have to leave your home (also losing any equity you may have established) and may even owe money: Oklahoma law allows your lender to pursue you for the deficiency if the foreclosure sale price is not enough to cover the balance of your mortgage.
Beware of scammers who may offer services intended to let them benefit from your situation.
When you are in financial distress, a better option is to contact an experienced bankruptcy attorney to discuss whether a bankruptcy filing can eliminate your debt situation and/or help you keep your house.
How Bankruptcy Could Help
Filing for Chapter 13 bankruptcy can prevent foreclosure by allowing you to propose a repayment plan that’s affordable for you and acceptable to your lender. You can tackle your mortgage arrears and any other unsecured debt and pay them all off within three to five years. If you’re not sure that you can sustain a long-term repayment plan, Chapter 7 bankruptcy can eliminate unsecured debt like credit cards and medical bills so that you can devote more of your income to keeping your mortgage current.
If you’re thinking about foreclosure, talk with an Oklahoma bankruptcy attorney first. Attorney B. David Sisson has years of experience in foreclosure defense strategies and will help you fight for your home. For more information, contact the Law Offices of B. David Sisson for a no-obligation consultation today.