BANKRUPTCY is bad. FORECLOSURE is worse.

BANKRUPTCY is bad. FORECLOSURE is worse.
Although it is preferable to avoid bankruptcy, it is even better to avoid foreclosure. Foreclosure is the legal process whereby property is repossessed and sold at auction to cover the costs of an unpaid debt. This is usually the result of a homeowner defaulting on mortgage or loan repayments. The most common causes of foreclosure are divorce, loss of employment or a death in the family.

The foreclosure process can be long and costly and is regulated by state law. The most important thing to remember if you are forced to make a mortgage payment late is to contact your lender immediately.

Most lenders have programs available that you can request called financial hardship packages in order to help you get caught back up on your mortgage payments or at least to assist with helping you to try and keep your home versus losing it due to foreclosure. The key to getting help from your lender though is to contact them early or the first chance you get when you know you are going to be late on a mortgage payment and stay in communication with them.

Although filing for a chapter 13 can prevent your home going through the foreclosure proceedings, its important to make on time monthly payments to your trustee and rebuild your credit so, that getting a refinance is easier to qualify.

If you are facing foreclosure and have exhausted all refinancing options, you may want to look into a sale-leaseback option. You may be able to stay in your home, improve your credit, and re-purchase your home at a later date.

To avoid foreclosure contact your lender as soon as you miss a mortgage payment. Often the lender will work with you to help you avoid foreclosure.

If you are struggling to pay your bills you may want to skip any other bills and pay your mortgage. Unpaid credit card bills will damage your credit but have no property loss consequences that a foreclosed mortgage does. Credit card companies are usually very flexible about payment plans to help customers who are in a hardship.

Many people facing foreclosure can get lucky and find an investor who is willing to buy their house and rent it to them while they clean up their finances to buy it back.

» DISCLAIMER: The information contained in this article on 'BANKRUPTCY is bad. FORECLOSURE is worse.' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.