If you are at risk of losing your home in a foreclosure auction, then understanding your options is critical to ensure your long-term financial health. Here is an overview of potentially feasible options:
Filing for bankruptcy will immediately halt the foreclosure, along with all other collection activity including calls, letters, and wage garnishment. You will then have a few months to work with the trustee to restructure your debts and keep your home. If this is not possible, then the bankruptcy foreclosure process will re-commence.
- Negotiate with Your Lender
Although your lender will not readily admit it, the truth is that they do not want to foreclose on your property. Not because they want to give you a break, but because they are not in the foreclosure businesses. As such, it may be worthwhile to reach out — even if you have done so in the past without success — and try to work out a compromise.
- Short Sell
If you can find a buyer for your home, then your lender may agree to a short sale. This is a transaction in which the net proceeds from selling a property are less than the debts secured against the property. Why would the lender agree to this? Because if you sell your home and give the lender 100 percent of the proceeds, they will not have to spend time and money foreclosing and then re-selling it (which could take a long time in a down market). If you head down this path, ensure that you present your lender with a reasonable offer from a qualified buyer.
Your lender may be willing to accept an assumption/lease proposal. In this scenario, the party that buys your home becomes your tenant. Although you no longer live in your home, you maintain ownership and the buyer assumes the loan (debt). Getting lenders to agree to an assumption/lease proposal is difficult, but it can happen. Just keep in mind that to stop the auction foreclosure process, your lease payments (i.e. the amount you get from the buyer) must cover your home ownership costs, including mortgage, property tax, and insurance. If there is a shortfall, you must be able to demonstrate to the lender’s satisfaction that you can make up the difference. For example, if your obligation is $2,500/month and your buyer is willing to give you $2,000/month, you must show that you can top this up with $500/month from your income or another source of funds.
To learn more, contact the Law Office of Charles H. Huber. We will give you the facts you need to make a clear and informed decision. And if you ultimately choose to file for bankruptcy, we will be there for you every step of the way, from initial filing through to successful discharge. We have over 30 years of experience with bankruptcy foreclosure cases. Our experience is your advantage!