Avoiding Foreclosure

Foreclosure is very common in this sagging economy. Whether it is a friend or family member, or someone who is renting a place where the owner is no longer able to afford the mortgage, it is nearly impossible to talk to anyone who hasn’t in some way been affected by it.

As a bankruptcy attorney, often I am asked what one can do to avoid and stop the process. Obviously the best way is to pay your mortgage. While that seems simple on the surface, all too often I see people that are behind on their mortgage but are keeping their credit card payments current. While it is noble to keep up with your credit card payments, you have to make sure you prioritize what you pay.

Your home is your most important debt responsibility. That is where you live and if you are not able to pay all of your expenses, your house payment is the last payment you should stop making.

Also, there are other payments that you should not neglect. Often, your taxes and insurance payments are escrowed such that your mortgage payments cover those expenses. But if these payments are not escrowed, you must make sure you are paying for insurance and taxes on your home. If you do not have insurance or it lapses, your mortgage company will place a very expensive policy on your home that you will be required to reimburse them for.

One of the most overlooked expenses is your Homeowner’s Association Dues, if you have an HOA in your community. Many people are unaware of the fact that failure to pay your HOA dues could result in a foreclosure being filed by the HOA.

However, sometimes unfortunate circumstances, such as a loss of job, severe medical problems, or divorce lead to inability to keep up paying all of your expenses. But all is not lost if you contact a bankruptcy attorney immediately to file a bankruptcy to stop the action and set up a payment plan to catch up. The problem is too often people wait until just a week or so before the sale date to start the bankruptcy filing process. Sometimes we can move quickly, but that often costs you more due to my having to stop working on other cases to deal with the emergency. Therefore it is best to contact my office as soon as you receive the notice so that we have plenty of time to gather all of the necessary information to file and stop the foreclosure.

The key is not to panic! Concentrate on the important expenses:
1) First mortgage payment
2) Second mortgage payment (if there is one)
3) Homeowners Association Dues
4) Taxes
5) Insurance

Make sure these are your priority. And don’t panic. Too often when people receive a notice, they panic by placing the mail aside or even not opening the mail. While it is certainly disheartening to receive such a notice, delaying taking action can cost you your home or make the process more expensive.