How To Stop Foreclosure
The standard measure of whether to keep the property is that if the monthly house payment, (including property taxes and insurance), is less than 40% of your gross monthly income, you should be able to hold on to it.
If greater than 40%, one should consider selling or transferring it, to avoid a negative effect on your credit rating. Borrowers who have equity in the property would more likely do this. They could pay off the mortgage, and keep any remaining equity.
Aside from not paying their loans on time, homeowners get into foreclosure by ignoring calls or letters from their lender or just giving up in the hope that things will get better.
Do not take a ‘wait and see’ attitude. Put your plan into action. Contact the appropriate people. Provide any requested information to the lender and/or its trustee (representative). Put everything in writing. If you have a telephone conversation with your lender, or the trustee, follow it up with a letter stating what was decided. If it’s not in writing, it never happened. Do what you said you’d do – lenders foreclose every day; you don’t want them to think you’re another deadbeat.
Alternatives to foreclosure or repossession:
– If procedural errors were made in the foreclosure or in the loan origination, you may consider filing a lawsuit to enjoin or stop the foreclosure. Consult with a solicitor.
– Bankruptcy is a temporary solution. It will stop the foreclosure for a short time only. It may give you some leverage in resolving the situation. Again, consult with an lawyer.
Chapter 13 bankruptcy: you should be able to keep your home and your car.
Chapter 7 bankruptcy: you will keep both for a while but you might ultimately be faced with repossession for liquidation.
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