Sometimes in life, financial hardship comes upon you unexpectedly. Even if you have always been diligent about paying your bills and debts, a sudden change in circumstances, such as a job loss or a major medical expense, can cause your finances to take a sharp downward turn.
The main monthly expense for many families is their home mortgage payment. Predictably, when finances take a turn for the worse, the mortgage payment is often the first bill to suffer the effects of lost wages or diminished income. If you are having trouble meeting your monthly mortgage payment, do not despair. There are options for you to restore your financial stability and remedy the situation. Here are three options to take into consideration as you examine how to proceed.
1. Loan modification
A loan modification can be the first step to try to avoid foreclosure by the bank. It is worth it for you to attempt to speak to your bank about the possibility of a loan modification before you face more drastic measures. A loan modification can make your loan payments more affordable while you make efforts to get your financial situation back on track.
2. Short sale
If the situation has progressed to a more critical stage, you may wish to consider a short sale. In a short sale situation, the mortgage lender agrees to allow you to sell your home for less than what you owe on the mortgage. In this scenario, the lender still gets partial payment on the mortgage rather than having to take the full hit of a foreclosure and sale at auction.
Bankruptcy is often the homeowner's last resort if he or she can no longer pay the mortgage. Although there can be a stigma attached to bankruptcy, in certain cases, it can be the best option for you and help you get a fresh financial start. There are two different types of bankruptcy for individuals: Chapter 7 and Chapter 13. If you are in a situation in which you think bankruptcy may be your only option, you should contact a qualified bankruptcy attorney to help you evaluate your case and plan the way forward.