As the economic recovery continues to progress at a snail’s pace, more and more Americans are in danger of losing their homes to foreclosure. Many homeowners choose to hire a foreclosure defense attorney to fight the claim in court, where lenders are increasingly vulnerable, thanks to a number of recent pro-homeowner decisions.
But there are still alternatives to fighting a foreclosure in court. The strategy you choose depends on whether you’re looking to keep your home, or simply walk away.
Foreclosure Alternatives: Keeping Your Home
If you’re looking to keep your home, alternatives to foreclosure include:
Make your payments current. By giving your lender all outstanding payments and fines, you can defeat the foreclosure claim. But this option usually isn’t realistic without a quick infusion of cash.
Rent your property. If the rent you’ll receive will cover your mortgage payments, finding a tenant could be a temporary solution. Renting, though, involves a lot of hidden costs, including taxes and insurance.
Modify the loan. If you’re able to make some payments, but can’t cover the original amount, your lender might be willing to change the terms of your loan. Not every lender is willing to modify loans homeowners, but it’s certainly worth a shot.
Refinance. Consumers with a significant amount of equity in their homes may be able to refinance their mortgage and secure a loan with lower monthly payments.
File Chapter 13 bankruptcy. By filing for Chapter 13 bankruptcy, you can take advantage of the automatic stay, which immediately stops a foreclosure action. Then, Chapter 13 lets you consolidate your debts into a reasonable repayment plan, and gives your three to five years to catch up on your mortgage.
Foreclosure Alternatives: Giving Up Your Home
For some consumers, the loss of their home will be inevitable. If you have to let go of your home, some of the most promising options include:
Short sale. If your home is “underwater,” or you owe more on your home than it’s worth, you could simply sell your home for your lender. Short sales prevent a foreclosure from appearing on your credit record, and save the expense of litigation. But your lender has to give its approval.
Deed-in-lieu of foreclosure. This action allows the borrower to simply return the deed to the lender, without going through the foreclosure process. This strategy, though, must be approved by lenders, who usually prefer to place the house on the market before considering a deed-in-lieu.
For more information about alternatives to foreclosure, contact a foreclosure defense attorney today.