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Advice on Help to Stop Foreclosure

Mark Cappel
UpdatedApr 8, 2009

We are facing possible foreclosure and need $2500 to get caught up on payments. What can we do?

I have poor credit. my current mortgage is held by the previous owner of the house we live in. interest rate is 12%. we have made many major home improvements in the past year and a half. we are facing possible foreclosure and need $2,500 to get caught up on payments. what can I do? I do not want to lose the house and don't know where we can get the help we need because of our credit.

The least cumbersome way to resolve this delinquency would be to formulate a firm repayment plan to which you and your husband can commit each month, and contact the mortgage holder directly to propose a plan to pay a certain amount each month in addition to your regular payments, slowly bringing your delinquent balance current. For example, if you can commit to increase your monthly mortgage payments by $200 each month, your delinquency (with interest) would be paid off within approximately 13 months. If you contact your lender, explain the financial hardship which led to the delinquency, and commit to paying off the delinquency within a reasonable amount of time, the lender will allow you to continue making your regular payments and not force the property into foreclosure. Also, your lender may be able to lower your interest rate, loan term, etc., to reduce your monthly payments, making repayment more feasible.

Another option to discuss with your lender would be to simply move, or defer, the delinquent payments to the end of the loan schedule. It is less likely that your lender will agree to this arrangement than he would to a plan to repay the delinquency as mentioned above. However, this is something that you may want to mention to your lender, as this type of plan is usually easier to calculate and track. Also, if you cannot afford to increase your monthly payments by a couple hundred of dollars, but are able to commit to making all mortgage payments in a timely manner going forward, you lender may be willing to defer your delinquent payments to assist you in keeping the property.

A final option to consider is filing for Chapter 13 bankruptcy protection. While a $2,500 delinquency is a rather small amount of money to justify filing for bankruptcy, it is a possible solution to help you keep the home if your lender will not work with you on a voluntary basis. Similar to the deferment option I mentioned previously, a Chapter 13 filing can frequently move a homeowner’s delinquent payments to the end of his mortgage amortization schedule. The benefit of filing bankruptcy is that any changes to your loan schedule would likely be imposed on the lender, so it can be very helpful for consumers whose lenders are unresponsive to the consumers’ efforts to work with their lenders directly.

Unfortunately, the fact that you have made significant improvements to the home does not generally have any bearing on the lenderÂ’s ability to foreclose on the property. Any permanent changes you have made become a part of the property, and if you do not make your mortgage payments, the lender usually has the right to foreclose on the property, including any improvements you have made. The good news is that there are several options available to consumers like you who are struggling with their home loan payments; to read more about the various possible solutions available to you, I encourage you to visit at the stop foreclosure page.

I wish you the best of luck in resolving this delinquency and hope that the information I have provided helps you Find. Learn. Save.