Facing foreclosure after job loss: What are your options?

On Behalf of | Jun 4, 2024 | Foreclosure

Losing your job at a time when you have an overwhelming amount of debt that you’re repaying can quickly turn your financial situation from bad to worse. Suppose you’re behind on your mortgage payment; the financial strain can trigger fears of losing your home.

The creditor financing your mortgage can decide to foreclose on your home in an attempt to recover your debt. The last thing you need at a time when you’re looking for a new source of income is to be evicted from your own home. Are there options you can explore to retain your home and preserve your dignity?

Plead your case to your lender

As soon as you lose your source of income, reach out to your lender and plead your case to them. Taking the initiative instead of missing your monthly payments without an explanation can help in finding a solution that works for both parties.

By demonstrating a willingness to continue paying your debt, your lender might decide not to explore eviction and foreclosure. Lenders understand that homeowners may experience financial hardship from time to time. For this reason, most of them have programs that help affected homeowners keep their homes without defaulting on their mortgage payments completely.

For instance, your lender may agree to momentarily pause your mortgage commitment until you get back on your feet. This way, you won’t have to choose between catering to your basic needs and fulfilling monthly mortgage payments. And once you find a new source of income, you can resume mortgage payments like you never stopped.

Explore bankruptcy

Suppose you reach out to your lender, but they refuse to compromise; you likely are still at risk of foreclosure. In this case, you might want to file for bankruptcy. The beauty of bankruptcy is that it can halt any foreclosure proceedings and offer you a suitable debt management plan that’s unique to your situation.

Bankruptcy allows you to enjoy a legal protection called an automatic stay as soon as you complete your filing. This protection pauses all debt collection activities that might make your life harder than it already is.

Facing foreclosure is a daunting challenge, but it does not have to spell the end of homeownership. You can speak to your lender, and if they don’t cooperate, bankruptcy can potentially provide a viable pathway to regain control over your financial situation. Speaking with a legal team can help you better understand how a debt management plan option will work.