If you are behind on your mortgage payments.

If you are having trouble paying your bills and making your payments, immediately contact your loan servicer to discuss your options. If you call them early on, most loan servicers are more than willing to work with customers that they believe are acting in good faith. However, the longer you wait to call, the fewer options you will have and the provider will be less willing to provide you help paying bills or help with your mortgage. For example, after you have missed a few payments, most loan servicers will not accept a partial mortgage payment of what you owe. They will immediately start foreclosure proceedings unless you immediately come up with the money to cover all your missed payments, plus any late fees.

Avoiding Default and Foreclosure

If you have fallen behind on your payments, you have the following foreclosure prevention options to discuss with your loan servicer:

 

 

 

Reinstatement: You pay the loan servicer the entire past-due amount, as well as any overdue mortgage type bills or late fees, by an agreed upon date. This option is very likely to be successful if your problem paying your mortgage is temporary and your need for help is short term.

Repayment plan: Your loan servicer gives you a predetermined amount of time to repay the mortgage amount you are behind by adding a portion of the loan that is past due to your regular payment. If you have missed a small number of payments, this option may be appropriate.

Forbearance: Your mortgage payments are suspended or reduced for a period your servicer and you agree to. At the end of that period, you immediately resume making your regular loan payments along with a lump sum payment. You may also agree to make partial payments for a period of time in order to bring the loan current. However, forbearance is not going to help you if your need for help paying bills is so great or if you are in a home you flat out cannot afford.

Loan modification: You and your loan servicer both agree to permanently change the terms of the loan in order to make your mortgage more manageable. Modifications can include everything from lowering the interest rate, adding missed payments to the loan balance, or even extending the length of the loan. A loan modification is often necessary if you are facing a long term reduction in your income.

In all cases, before you ask for a loan modification or forbearance, you must be prepared to show that you are making a strong, good-faith effort to pay your mortgage loan. As an example, if you can show that you have reduced other expenses and paid other bills on time, your loan servicer will be morel likely to provide you with help and is more likely to negotiate with you.

Selling your home: Of course, selling your house may provide the money you need to pay off your current mortgage in full.

Bankruptcy: As the very last resort, personal bankruptcy is the option of last resort because the results are far reaching and long-lasting. A bankruptcy filing will stay on your credit report for 10 years. It will make it difficult, if not impossible, to buy another home, obtain credit, get life insurance, or, in some cases, prevent you from getting a job. Still, it is a legal procedure and is always an option for that can provide needed help and a fresh start for people who cannot satisfy their debts or bills any other way. Find help with bankruptcy.

Review Chapter 13 bankruptcy. If you have a regular income stream, Chapter 13 may allow you to keep property, like a car or mortgaged home, that you may otherwise lose. In a Chapter 13 bankruptcy filing, the court will approve a repayment plan that will allow you to use future income to pay your bills and debts during a limited three-to-five-year period and keep the property. After you have made all the required payments under the bankruptcy plan, you will receive a discharge of certain debts.