Life is unpredictable and financial downfall can happen to anyone. If you’ve fallen behind on your mortgage payments, foreclosure can seem inevitable.
But don’t give up hope yet. Here are five strategies to try to stop foreclosure at the last minute.
1. File for Bankruptcy
If you’re hoping to keep the home, you’ll want to try for a Chapter 13 bankruptcy, in which you pay down outstanding debts through a structured repayment plan.
If you’re looking to buy time and don’t need to keep the house, a Chapter 7 bankruptcy is your better option. You will be able to remain in the house without making payments during the bankruptcy process. You can then try to work something out with the lender or use the money you’re earning to save up for a new place.
While filing for bankruptcy puts the foreclosure process on pause while you deal with outstanding debt, it will hurt your credit.
2. Modify your loan
This is highly dependent on your lender, so not a solution that can work for everyone. However, some lenders are willing to negotiate a modification, which lowers the amount you need to pay each month.
If the modification makes the new monthly payment within your budget, you will be able to remain in the home while meeting your obligations to your lender.
It’s worth noting that lenders don’t need to pause the foreclosure process while they’re reviewing your loan modification request. Some homeowners prefer the peace of mind that comes from a strategy that hits pause on the foreclosure — if that’s you, consider another tactic first.
3. Get a Deed in Lieu of Foreclosure
Like bankruptcy, this will still hurt your credit. However, a deed in lieu of foreclosure gives the lender ownership of your home through a short sale process. Lenders tend to be reluctant to agree to this option, as sometimes buyers try to sue after the fact, claiming that they did not understand what they were doing.
This option is a good last-minute resort when you have tried everything else for how to stop foreclosure at the last minute and simply do not want to have a foreclosure on your records.
4. File a Lawsuit
In the event that your lender is using a nonjudicial foreclosure process, which takes place outside of the county system, initiating a lawsuit may bring the foreclosure to a temporary halt. In the lawsuit, you challenge the lender’s right to foreclosure on the house. If your foreclosure is judicial, this tactic won’t work because the issue has already been reviewed by the courts.
This strategy does have risks: Filing a lawsuit can be expensive. There are filing fees you must pay, and when you initiate a lawsuit you must prove that your version of events is correct. For a foreclosure, this means demonstrating the lender lacks adequate proof that it owns the promissory note, violated the Homeowner’s Bill of Rights, ignored state mediation requirements regarding foreclosure, or made some other error that would be large enough to halt the foreclosure.
Before filing a lawsuit, you may wish to seek legal advice; an attorney can suggest whether you have a case or whether another way to stop foreclosure at the last minute would better serve you.
5. Sell Your House Quickly
The mortgage lender wants its money back. If you can sell the home in as-is condition and raise enough money to repay the outstanding balance of the loan, you can avoid foreclosure and keep your credit rating.
When you need to sell a house quickly, your best option is to look for a cash buyer who is ready to move forward and doesn’t need mortgage financing. Selling as-is means you won’t need to pay for any repairs on the home, work with a real estate agent, stage and show the home, and wait for financing.
HomeGo has helped buyers facing foreclosure sell their houses quickly and avoid the foreclosure process. We can make a same-day offer on your house and close the deal in as little as seven days.
Stop wondering how to stop foreclosure at the last minute and take action today to prevent foreclosure on your house. Get an offer from HomeGo today.