Dealing with the Threat of Foreclosure

There are many ways of dealing with the threat of foreclosure. Most people just let it happen, unable to believe how fast things went wrong, and preferring to deal with more immediate and manageable problems. Others borrow from friends and family to buy more time to try and save their home from foreclosure. Others turn to professionals for help, and this can take several forms. Many foreclosure defense experts can suggest several legal options to delay or suspend foreclosure. Most homeowners have only the vaguest ideas about the terms of their mortgage, and would not know how to turn it to their advantage. A homeowner facing foreclosure may consider pursuing mortgage modification. If there is something hinky about the mortgage agreement itself, it could be a case of filing a claim based on a violation of the Truth in Lending Act.

If these two are not possible, the firm may also suggest filing for bankruptcy if the homeowner qualifies for either Chapter 13 or 7 bankruptcy. Most states, including Iowa, may exempt the primary home from a Chapter 7 filing and forgive the debt, or with a Chapter 13 filing, foreclosure may be considerably delayed. There are also cases where the market value of the property is less than the balance of the mortgage because the real estate market plunged considerably in the last few years. While it may be a wrench to let go of the property, especially if payment has already been made for several years, cutting losses may be the smartest thing to do.

Some professionals, after due consideration of the market trend in the area and the amounts involved, may suggest a short sale. A short sale involves selling the house at market value or less, and giving the proceeds to the mortgage holder. The lender has to agree to lift the lien on the property in order to get it sold. In most cases, the homeowner still owes the lender the balance, and the lender can choose to forgive the debt or demand payment. In the case of the former, the homeowner may still be liable for taxes on the forgiven debt. However, if handled properly, the amounts concerned will definitely be less, and the credit score will no longer reflect unpaid debt. Dealing with the threat of foreclosure can be highly stressful. The best way to handle such situations is to get the advice of experts to get a realistic view of a particular situation. Though short sale is a viable option, it’s not for everyone. If you are considering refinancing, bankruptcy may be the best option for you depending on your case.