Bankruptcy and Home Foreclosures: What to do when you get the notice of foreclosure.

As a bankruptcy practitioner for 15 years, I have seen people react completely differently to a notice of home foreclosure. They all, however, share one common thread; they are not in this situation by choice. Falling behind on your mortgage payments is the last consequence of financial distress. Most people will modify their spending habits or re-prioritize their monthly bills in an effort to keep their mortgages current. Receiving a notice of foreclosure is that one piece of paper that tumbles the house of cards they have been trying to maintain. If you have fallen behind on your mortgage payments by even one month, follow this friendly advice:

Process Your Mail

First, PROCESS YOUR MAIL. Repeatedly I am encountered by prospective clients that have not opened their mail or picked up their certified mail at the post office for weeks. It is imperative to retrieve, open, and read your mail from credit card issuers, mortgage companies, attorneys, or vehicle lien holders. If you start receiving propaganda letters on how to save your home from foreclosure, that should be a triggering factor to immediately contact your mortgage company for a status on your loan. Do not rely on the logic that you have not received a letter or notice, especially if you have been lax in processing your correspondence.

Study your Options

Second, study and consider your options. Bankruptcy may not be the only option to deal with a notice of foreclosure. Loan modifications, short sales, and deeds in lieu of foreclosure are all alternatives. This article does not intend to discuss these options, but it does intend to create an awareness of the alternatives.

Have Realistic Expectations

Third, create realistic expectations and convey them to your family. Bankruptcy does not generate income, it helps reorganize or restructure the income already there. If you fell behind on your mortgage because of temporary illness or unemployment, but are now generating enough money to cover your monthly mortgage payments, chapter 13 may help you get current on your mortgage during a three or five-year plan. If you are not generating enough income and do not anticipate a substantial income increase in the future, study and consider your options and meet with a bankruptcy attorney at the first sign of trouble.

Consult an Attorney

Finally, it is never too early for a bankruptcy consultation. I encourage you to contact a bankruptcy attorney to assess your situation and discuss your options. You do not have to wait for a notice of home foreclosure to receive advice on how bankruptcy can help you save your home. Contact a bankruptcy lawyer by phone or e-mail today.  

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