Money problems can crop up almost overnight, even for people who have historically been very responsible. Maybe you get laid off from your job, or perhaps you get into a car crash that leaves you too hurt to work.
When your expenses increase or your income decreases, you may no longer be able to fulfill all your monthly budgetary requirements. If you have to pick and choose what bills to pay, that can leave other accounts unpaid.
When you don’t pay your mortgage, the bank can then claim that you defaulted. Is there any way to stop a default from progressing into a foreclosure?
Quick and full repayment can prevent foreclosure
When you fail to make a mortgage payment, your lender is going to hit you with a number of fees. There may be late-payment fees, as well as default specific charges that they assessed against your loan. In some cases, they may even send an assessor or inspector out to make sure that you both live at the property in question and have maintained it appropriately.
You will have to pay all those fees, as well as the full balance of any missed payments, in order to bring your account out of default. When you consider that those fees they assessed may be hundreds of additional dollars, that repayment may not be easy to arrange.
Filing for bankruptcy could halt foreclosure
When your mortgage is in default and you believe that a foreclosure notice could come any day or you have already received one, you need to act quickly. When you file for bankruptcy, you receive an automatic stay that will help collection activity until the courts determine whether you qualify for bankruptcy or not.
You can use the automatic stay to prevent foreclosure temporarily and possibly use your bankruptcy proceedings to initiate negotiations with your lender that may allow you to come out of default and retain your home.