How to Avoid Foreclosure

Foreclosure has taken away the home of millions of Americans in the past few years, and it can very well happen to anyone—especially to those who are currently struggling with their mortgages. But no matter how stressful the threat of foreclosure is, it can actually be avoided.

Giving up outright should never be an option. If you choose to accept defeat, foreclosure can bear down on you and significantly hurt your credit rating, making it difficult (if not impossible) to buy a new home soon. There are various options you can consider in order to avoid foreclosure; the right choice can significantly help in your situation.

Filing for bankruptcy is one logical solution, which can work well at the last minute (e.g. if the foreclosure is scheduled to occur within the next few days). As soon as you file for bankruptcy, a special clause called an “automatic stay” will abruptly halt the foreclosure. The automatic stay works as an order which prohibits the mortgage lender from foreclosing your home or collecting its debt.

Another method involves “forgiving” a payment. Talk to your lender about the terms, and see if you can agree on a way for your obligation to be waived after you fail to pay without the means to reimburse. Keep in mind that negotiations like this are better worked out as soon as possible.