Understanding Foreclosure Options

People facing foreclosure may feel that their options are limited when it comes to dealing with the default and handling their current bills as well. Fortunately, if you are dealing with the possibility of foreclosure, our team of professional Orange County Bankruptcy Attorneys may be able to help you save your home and repay what you owe. Even if you don’t qualify for a Chapter 13 bankruptcy, you may have other options available that will prevent having a foreclosure on your credit report.

If You Can Still Make Payments

If you are still able to make payments on your mortgage, you have a variety of options. You may be able to negotiate with the lender in order to get your loan modified. Currently, there are many organizations available to help you with this process, and you may be able to have your interest rate adjusted, the principal reduced, payments adjusted, or any number of mortgage modifications that can help you afford your home again.

If you are unable to negotiate with the lender, filing for Chapter 13 bankruptcy protection will put a halt to the foreclosure process. Additionally, the bankruptcy judge may be able to make your mortgage affordable as well. Even if your loan cannot be modified, adjusting other debts, such as your car, or minimizing and/or eliminating payments to unsecured creditors may free up enough money for you to be able to afford your mortgage payment again.

If You Cannot Make Payments

If you cannot make mortgage payments any longer, either due to employment issues or other income difficulties, you may still be able to avoid having a foreclosure on your credit report, even if you must give up your home. Two of the most common options available are the short sell and the deed in lieu of foreclosure.

In the short sell, you get the bank to agree to take less for the house than what you actually owe. You will be required to find a buyer, and make arrangements to have the house sold. This can be beneficial in some markets where housing prices have dropped, but not so extensively that a bank would be unwilling to accept the current market rate.

For a deed in lieu, the bank takes back the deed to your home, and accepts the equity you currently have established in the home and forgive the rest of the money you owe on the mortgage. In this way, you no longer owe the bank for the home, and you may be able to negotiate the time you can stay in your home, which will typically be longer than if you were going through a foreclosure.