Don’t Skip The Mortgage For Christmas!

There’s often a balloon in bankruptcy and foreclosures soon after Christmas in part because folks “skip a payment” to buy presents. This is never a good idea and now it is even worse.

First, if you want to keep your home, the mortgage comes before virtually everything. I tell my clients it comes before they eat. It may be satisfying to pay several smaller bills first — feels like solving a dozen problems, right? — but if the biggest bill you didn’t pay was your mortgage then your problems are getting worse, not better.

If you have an adjustable rate mortgage that might be adjusting soon to a rate you cannot afford, it is possible you are a candidate for the teaser-freezer plan announced by the White House. But as we have emphasized, you have to be current to qualify. Skipping a payment to buy a new HDTV or just a couple extra toys for the kids will knock you out of consideration. You will have the nicest TV in the homeless shelter.

If you have already filed bankruptcy and are trying to save your home through a Chapter 13 plan, the same advice applies with even more urgency. If your plan provides for you to make the mortgage payment “outside” your case, skipping that payment may take away your last chance to save your home.

It is easy to think “well, I’ll make this up next month, I don’t want to disappoint the kids.” The problem is that you won’t be making more money next month probably. Your expenses will be the same or maybe higher, given the prices of food, gas and electricity. So where will the “make-up” payment come from? If you are not already in the “Robbing Peter to Pay Paul” cycle, this could start it.

It is easy for me to sit back and suggest disappointing the kids during the holidays. They’re not my kids. But perhaps keeping a roof over their heads is a worthy goal as well. And teaching the lesson of taking care of “needs” before “wants” could be the best present you can give them this year.