There are several ways to stop home foreclosure. You do either one of them a combination of more than one them.
Here are the options you have to stop home foreclosure:
A. Options can be used to save your home:
1. Loan modification
2. Reinstate your loan with you IRA money or borrow from relatives or friends
3. Work with default paper investors
4. Partial claim through FHA loan insurance
5. Request forbearance from your lender
6. File bankruptcy to buy you sometimes
B. Options can be used to stop foreclosure sale:
1. Do a short sale to prevent foreclosure from staining your credit record.
3. Do a deed in lieu foreclosure to give the property back to lender in exchange for lender not to report your home foreclosure to credit bureau.
If none of above options works for you, you can still have other way to keep your home. You can also file Chapter 13 bankruptcy to stop the foreclosure sale right at the morning of the day that foreclosure sale is conducted. You can also choose to do a short sale to stop foreclosure and keep your credit history not to be stained by the foreclosure record.
Some borrowers thought that filing Chapter 13 bankruptcy could automatically save their home. But, this is not true. If you file a Chapter 13 bankruptcy, you may or may not get approved by the judge depending on your financial situation. If the judge does not approve your bankruptcy filing, lender can initiate the foreclosure on your home again. Filing Chapter 13 does help you to buy sometime, possible few months and even a year or longer to save your home. Some borrowers do use this strategy to stay in the home for free for few months, a years, or even longer. Imagine that if you stay home for a year of more without making your mortgage payments. Let said, the monthly mortgage payment was $1500 per month and $18,000 a year. Staying in a home for one year is equivalent to an increase of pre-tax salary of at least $25,000 a year. For some, this is a very good option for them. However, I don’t encourage you to do that because the financial consequence can cost far more than that. Do you still remember how much could cost you for being unable to own a home for ten years as I described earlier?
If you got a Chapter 13 approved by the court and you make ALL of the payments, you can keep the house as soon as you make payment under the plan.
I am not an attorney and not in a position to give you any legal advice. What I am giving you is the information that how it works. You should also always seek the consultant from an attorney on any legal issue. Again, I am not giving legal advice on whether you should or should not file a bankruptcy to keep your home.
But in my personal opinion, filing bankruptcy is the last avenue you should take. You can file Chapter 13 right before the morning of the foreclosure sale to stop it. In order to do it right, you should at least give yourself one week to work with a good bankruptcy attorney before the foreclosure sale is conducted.
Now, after you reading this book, you should know that filing bankruptcy should never be your first option because you have known that there are several much better options than bankruptcy.
The reasons I said so are:
1. It is not at bankruptcy attorney’s best interest to tell you not to file bankruptcy;
2. It is not the best interest for a bankruptcy attorney to tell you all those options you have to keep your home;
3. It may not fair to some attorneys that they don’t want you to know those better options you have because most of them do not know those options that I have been described in this book.
4. There are upfront costs to you for filing bankruptcy. It cost you $1500 or more to hire an attorney to do it for you.
5. There are future financial consequences for having the bankruptcy in your credit reports.
6. There could be uneasiness and even pain emotionally for some people to go through the lengthy process of bankruptcy.