You’ve always been able to make your mortgage payments on time, but due to losing your job for a period of time and seeing changes in your income, you’ve fallen behind. This is completely normal and is something many people in America deal with. You may have survived on your savings for a short time, but if you have found that you can’t keep up, then looking into debt reduction and elimination options is a good idea.
If you’re thinking about bankruptcy, one of the things you have to ask yourself is if you’ve considered all other avenues. Bankruptcy is a little bit like a nuclear option in that it will hurt your credit score and may limit your options if you need credit or loans for the next few years.
Instead of jumping to bankruptcy, think about alternatives before you miss your first mortgage payment.
What alternatives to bankruptcy could help?
There are a few alternatives that could help you if you’re about to miss a mortgage payment. The first is to reach out to your lender and tell them what happened. People lose their jobs and have emergencies, so lenders are prepared to talk you through options such as skipping a payment or reducing fees to help you get on track if you do need to miss one. Sometimes, they’ll be willing to forgive payments and tack them on to the end of the loan, so that you can have some time to get back on your feet.
Why would lenders do this? At the end of the day, they would rather have people pay back what they’ve been lent than to go into bankruptcy.
Another alternative could be to refinance your mortgage to make it more affordable. You’ll need to do this before you miss payments, because if your credit score is affected, you may not be able to get a new mortgage at all.
When is bankruptcy a good choice?
If you are already behind on your mortgage or have received a foreclosure notice, now is the time to look into Chapter 13 bankruptcy. If you are earning a wage now and want to keep your home, this kind of bankruptcy may help you pay back the missed payments over time and get back on track financially.