There are several ways to stop a foreclosure, but the best way is to prevent it from happening in the first place. To do this, you must act before your lender files that notice of default. If you call your lender as soon as you know that your payment will be late – or that it will remain unpaid, then you may be able to work out a solution together. Calling early will give you a lot more options.
A lender may agree to forbearance, which is agreeing to wait for a specific time period before starting foreclosure proceedings. This can give you some breathing space to come up with the payment. Or if you have already missed payments, he may allow you to repay them by spreading them out over several months and adding them to the monthly payment. This is called a partial payment plan.
Your lender may agree to refinance the loan so that the payments are more affordable. He may also agree to reduce the interest, extend the low interest period or change the loan to a fixed rate, rather than an adjustable rate. The lender may also agree to add the missed payments onto the loan balance, so that you don’t actually have to pay extra each month to make them up. This is all known as refinancing.
If the Notice of Default has already been filed, you can stop foreclosure by selling your home. You may need to drop the price to get it sold quickly, though, so be sure that you still get enough to pay your other costs. In some cases your lender may agree to a short sale, but mostly they don’t like this option, as it does not cover the full debt owed. A deed in lieu is another option discussed elsewhere in this ebook.
If foreclosure proceedings have been started, you can stop them if you file for Chapter 13 bankruptcy in the approved manner. This should always be a last resort. You still have to make the payments under the Chapter 13 bankruptcy plan, and failure to do so will restart the foreclosure proceedings.
Another way to stop foreclosure before it starts is to keep on making payments regularly, even though you have missed one, or even two payments. While you may not be able to afford the extra payments that are now due, you will at least not be in arrears for the current payments. This will make your lender more amenable to helping you.
