Homeownership is often a landmark for a family or individual that they are doing well. Buying your first home or purchasing a larger home for a growing family is a point of pride and accomplishment.
If you are behind on your mortgage payments, it doesn’t necessarily mean that you’re destined to lose your home. One of your options is to talk with a compassionate and experienced attorney like those at Kain + Henehan.
What is Foreclosure?
Foreclosure is the legal process where your mortgage company (bank) takes ownership of your home -meaning repossesses the property. A foreclosure can happen when you fail to pay your mortgage payments and have to default on the loan the bank gave you to buy the house. Sadly, you and your family must leave your home. The mortgage holder doesn’t really want the house. They would prefer getting the monthly payments originally negotiated. They instead must take your house to sell and recoup their loss.
How to Prevent Foreclosure
Here are some of the strategies that you can take to prevent your house from being foreclosed on:
Prioritize Your Monthly Mortgage Payments
Paying your monthly mortgage payment on time each month is the best way to prevent foreclosure on your home. If you don’t have enough money to pay all your bills, it is better to prioritize your mortgage above all other bills.
If you miss a credit card payment, they’ll issue you a late fee and may close your account. They may even take legal action against you to try to force you to pay what you owe. However, if you don’t pay your mortgage, you’ll lose your home.
Work with Your Lender
Generally, your lender would rather you pay your loan than foreclose on your house. Try to work out a repayment plan with your lender if something temporarily impacts your ability to pay your mortgage. It is possible that your lender will work with you on a repayment plan to keep you in your home. This would have a much smaller impact on your life than if you had a foreclosure.
You can also ask for forbearance. This is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited time while you regain your financial footing. This gives you leniency in your payments for a set amount of time, including possible delaying when you need to make payments. Some common reasons lenders approve applications for mortgage forbearance include:
● Struggles related to Covid 19 pandemic
● Job loss
If your situation is a permanent change, you can apply for a loan modification or refinance your mortgage with new terms and an interest rate that results in a lower payment each month. In most cases, this process takes what you owe on your current mortgage and divides it up over a new loan term. Since this amount is less than what you purchased your home for, the payment can be much less.
File for Chapter 13 Bankruptcy
In a Chapter 13 type bankruptcy, the goal is to reorganize your debt repayments, so you can keep your home – meaning this type of bankruptcy is a payment plan bankruptcy. It allows you to repay your creditors partially or in full. The payment term can be between 3-5 years. This type of bankruptcy is very similar to debt consolidation programs but with all the protections given by the federal courts.
In Minnesota, this type of bankruptcy is available to people that make over the median income in Minnesota and don’t qualify for a chapter 7 bankruptcy. It is also available to people with any type of income that has fallen behind on rent, mortgage, or car payments, or have tax debt to work out. At Kain + Henehan, we develop a payment plan with you. The plan is not developed by the bankruptcy judge or your creditors. It is developed with your circumstances in mind.
If you have a large amount of debt that includes credit cards and medical bills, filing for Chapter 13 bankruptcy can make sense for you to save your home.
Contact Minnesota Law Firm, Kain + Henehan in our St Cloud or Twin Cities offices.
If you’re concerned about foreclosure on your home, you have options. Our experience in preventing foreclosure allows us to help you with the best advice in your specific case. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form.