Some homeowners facing foreclosure are considering filing bankruptcy. Even though this might be an option for some people, there are a lot of other things you should try before filing bankruptcy to stop foreclosure.
The first thing you need to do is contact your mortgage lender. The sooner you do this the better. It's best to contact your lender as soon as you realize you might miss a payment. not after you've already missed one or two. Then your mortgage lender will be more likely to negotiate other options with you so you will not have to consider filing for bankruptcy.
Some of the possibilities you can try to negotiate with your lender would be reinstatement, forbearance, or a repayment plan, all of which are options if your money problems are temporary. If your money problems are not temporary, before you can try to negotiate with your lender to get a mortgage modification or a partial claim.
If none of these solutions will work for you and you won't be able to keep your home, before filing bankruptcy to stop foreclosure you should try to sell your home, or see if the mortgage company will allow assumption, a pre-foreclosure sale or short sale, or the deed-in-lieu of foreclosure.
All of these options require you to work with your current mortgage lender. If your mortgage lender is not willing to negotiate with you, you can try calling a HUD approved foreclosure counseling agency to get some assistance going over your options. These are usually free.
If at all possible you should avoid filing for bankruptcy as this will impact your credit rating and make things difficult for you in the future. Filing bankruptcy to prevent foreclosure is also not an option for everyone, and not all types of bankruptcies actually stop foreclosure.
A Chapter 13 Bankruptcy can stop foreclosure, so if you are thinking of filing bankruptcy, you should check to see if you quality for this type of bankruptcy, as not everyone does.
Be advised that filing bankruptcy to stop foreclosure won't mean you no longer have to make any payments on your house. A part of Chapter 13 Bankruptcy is a payment plan to pay off at least part of the money you owe to creditors such as your mortgage lender.
Remember, don't wait until you've already missed a payment or two before talking to your mortgage lender. Do it early!
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