Simple Steps to Take When You Get a Foreclosure Notice

27 Jul Simple Steps to Take When You Get a Foreclosure Notice

What do you do when you get a mortgage foreclosure notice? More and more people every day are experiencing one of the most unsettling things that can happen in your financial life. People who never expected to have to deal with such a thing are faced with a new reality. So, what do you do?

1. Do not ignore it. No matter what your circumstances, whether you are determined to keep your home, or resigned to losing it, nothing justifies ignoring such a notice. No matter how dire the situation, you need to face up to it, figure out your options, and make an informed decision. It may be tempting to stick your head in the sand, but sooner or later you’ll be forced to face it, and it might as well be early enough in the process to take constructive action.

2. Go see a lawyer. You need to know what the process will be like, and how much time you have, at a bare minimum. Laws can differ drastically from state to state, and the process that may take months in one part of the country may take 60 days or less in another. A lawyer will be able to tell what the process is like, the timeframe for taking action, or deciding to take none. A lawyer may be able to suggest a way to defend the foreclosure action, or discuss filing a bankruptcy. Don’t be afraid of the cost. Many lawyers offer a free or reasonably priced brief consultation for just such a purpose.

3. Call your mortgage company. You probably already have, and you may be sick of talking with those people who hounded you on the phone to send payments, when you told them you just didn’t have it to send. (The collection folks probably didn’t have the authority to modify the loan anyway.) If the property is in foreclosure, however, you probably aren’t going to talk to those folks any more. Once a foreclosure is started, you are probably going to talk to someone in the mortgage company’s “loss mitigation,” department, who may be able to help, or offer another solution, whether it’s a mortgage modification to allow you to keep the house, or the possibility of a deed in lieu of foreclosure or a short sale. It may be difficult to get through, or to get to talk to someone with the ability to help, but this is one of those times where persistence pays off.

4. Check out the Making Home Affordable web site, or NCLC’s mortgage modification portal, to check out possible loan modification options and see if you qualify. Frankly, some people don’t, and not all programs are available through all lenders. But if you qualify, the modification can be extremely beneficial. Many programs are available to those already in foreclosure, and some are designed specifically for that circumstance.

5. Save as much money as you can. No matter what eventually happens, or what decision you make, you will need a nest egg. If you decide to sell or walk away from your home, you will have to pay moving expenses, utility deposits, and such. If you can work out a modification, you may need to make a lump sum payment, or at least demonstrate that you have the ability to make a payment. If you decide to file a Chapter 13 bankruptcy to keep your home, you will need money to pay attorney fees.

Getting a foreclosure notice is no one’s idea of a good thing, but you can survive the experience and come out the other side in better financial health than before.

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Däna (pronounced "Donna") Wilkinson, has been a bankruptcy lawyer in South Carolina for 20 years. She is certified as a bankruptcy specialist by the South Carolina Supreme Court.
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