Monday, March 08, 2010

Foreclosure Woes

From my weekly (AM) radio segment titled "Legal Minute"

If foreclosure looms due to some missed payments, the first hard question to ask is whether you can afford to keep your house. The first thing you need to do is assess your equity in your home. The options you may or may not have depend on the extent of your equity. Second, use your time wisely to determine if there is a way out of foreclosure. Fortunately, foreclosure does not happen immediately. This gives you some time to pursue alternatives. You may be able to take advantage of recourse under the HOPE for Homeowners Act of 2008. Under the act you may be able to reduce your debt load by refinancing your mortgage under more favorable terms. Bankruptcy is another way in which to reduce your debt load. For instance, filing a Chapter 13 bankruptcy may allow you to pay off the late payments over a period of time. If you make all of the required payments by the end of the repayment period, you will be able to avoid foreclosure. A Chapter 7 bankruptcy, however, cannot cancel foreclosure. Negotiating loan forbearance with your lender, in which you make a reduced payment or no payment for a period of time, is another option.