Chapter 13 Bankruptcy: You may wish to keep your house and continue to live there and to do this, you will need to either catch-up on the mortgage payments that you are behind on, or get the bank to modify your loan to make the monthly payments more manageable for you. A Chapter 13 Bankruptcy is a solution to the problem for many people who have regular income and just need some extra time to catch up on the mortgage payments that they missed. In some cases, if you have a second mortgage or home equity loan, we can ask the bankruptcy court to get rid of that loan all together to substantially reduce the amount you will owe to your bank. Filing a bankruptcy petition prior to a foreclosure auction is a very powerful tool to stop your bank dead in their tracks from taking your house away from you. To lean more about Chapter 13 Bankruptcy, please visit Massachusetts Bankruptcy Center and see how bankruptcy can help you, including getting rid of certain liens on your house.

Loan Modification: Another way to keep your house is to get your bank to modify or change the terms of your loan to make it easier for you to make the monthly payments. A loan modification is like re-writing the loan and it creates a new agreement between you and your bank. To do this, your bank will want to know about your current finances and how you plan to pay them if they agree to modify your loan.

Forbearance Agreement: In some cases, your bank will allow you to stop making the regular monthly payments for a period of time until you get back on your feet at which time, you agree to resume making the monthly mortgage payments. This is called a forbearance and like a loan modification, your bank will want to know about your ability to pay them in the future and where you will get the money to do that.

Traditional Sale: If you have equity in your house, meaning that your house is worth more money than you owe to the bank, you may be able to sell your house if the bank will give you some time to list it on the market for sale with a real estate broker. If you are able to sell your house and avoid a foreclosure and pay your mortgage off in full when you sell, that will solve your problems for the most part. Your credit rating will not have a foreclosure notation, which is very harmful to you in terms of borrowing money in the future and you will be free to buy a house again when you are ready. Our in house real estate firm may be able to assist you in this process. Click here to visit Estate Realty, Inc. Estate Realty Inc to learn more about selling your home.

Short Sale: An example of a short sale is if you owe the bank $350,000 on your mortgage and the bank agrees to let you sell your home to a buyer for $300,000. In this example, the bank has agreed to accept less than you legally owe them as payment in full for the money you borrowed when you bought your house. Banks nowadays are agreeing to short sales because of the drop in real estate values and they see short sales as a way of cutting their losses. It is called a short sale, because under normal circumstances when you sell your home, you pay the bank off in full. With a short sale, at the closing or passing of the papers, you are short the amount of money to pay off the bank in full, but if they agree to this, it could benefit you greatly because you will have avoided a foreclosure on your credit rating.

Surrendering or Walking Away: When it is clear that other options will not work for one reason or another, or you have decided that you do not want to keep your house anymore and you want to stop making the mortgage payments forever, you can surrender or give back your house to the bank and file a Chapter 7 Bankruptcy. With this type of bankruptcy, which many people will qualify for, your bank is listed on your bankruptcy petition as a creditor and you also state your intention to surrender the house back to the bank and upon receiving a discharge in your Chapter 7 Bankruptcy case, you will no longer owe your bank any money. For many people who have simply had it with making big mortgage payments for a house that has dropped in value due to the recent economic climate, this option can be best for getting out of enormous debt and getting a fresh start. To learn more about Chapter 7 Bankruptcy, please visit Massachusetts Bankruptcy Center and see how bankruptcy can help you.

Falling behind on your mortgage can be scary, frustrating and stressful. Now is the time to take steps in the right direction which will allow you to continue to live in your home and restore your peace of mind. The following ten tips may not apply to everyone equally, and depending on what your individual situation is, chances are you can immediately benefit from several of these time tested tips to save your home from foreclosure.

1. Always open your mail and sign for certified mail. Ignoring letters and notices from your bank or their lawyers is a big mistake. You need to know what is going on in order to get the assistance you need in time to take action. Knowledge is power and the more you know the better off you will be.

2. Contact your lender immediately. If you even think you are going to fall behind on your mortgage payment, call your lender and let them know, even if you are not behind yet. Often times, the earlier you call your lender to ask for help, the better off you will be.

3. Know what you owe. In order to solve the problem, it is best to know as accurately as possible, what the problem is. Call your lender and have them tell you exactly how much money is past due and how much money it will take to bring your loan back into current status. Ask them to put it in writing. Often times this is called a “reinstatement figure.”

4. Avoid going three months past due. Usually, if your loan is past due over ninety days, your lender will have hired a law firm to officially place your loan in foreclosure status. If this happens, unfortunately, you will be responsible for paying that law firm. The amount you owe to bring your loan current will often be more than you think because legal fees, late fees and other fees have been added to your balance. The other problem with going past due over ninety days is that your lender may now refuse to accept any payments from you, unless you pay the full amount that is past due on your loan, or worse yet, demand that you pay the entire principal balance owing.

5. Create a budget. Make a list of what all your monthly expenses are and your monthly income from all sources. Your lender will need to know this information in order to help you and so will your attorney if you should decide to seek legal advice.
6. Apply for a loan modification. Most lenders will encourage you to apply for a loan modification which can help you avoid foreclosure and keep your home. Your lender has the ability to lower your interest rate and your monthly payment, but they are not legally required to do those things, but they can if they want to. Applying for a loan modification is like asking your lender for a favor. So be nice when asking your lender for a loan modification.

7. Stay involved in the process. Many homeowners who have applied for a loan modification are surprised to learn that their lender can keep the foreclosure process going at the same time! This may not seem fair, but the lender is going to take whatever steps are necessary to protect their rights, and so should you. Even though you have applied for a loan modification, your lender can still foreclose on your home and auction it off. You will need to stay in regular contact with your lender to make sure that they have postponed your auction to give them time to review your loan modification application.
8. Avoid foreclosure rescue scams. Do not believe anyone who guarantees or promises that they can save your home from foreclosure, especially if they are an out of state company. While these promises may sound comforting and appealing, they are nothing more than a wolf dressed in sheeps clothing. No matter how much you would like to believe what they say is true, dont fall for it, and do not sign anything.

9. Save as much money as you can. Cut your expenses as much as possible and look for creative ways to earn more money that you can put aside to apply to your mortgage payments. Your lender is more likely to help you if they can see that you are being financially responsible even though you have fallen behind on your mortgage.

10. Talk to a local attorney. Contact a local attorney in your area to learn what your legal rights are. Many attorneys offer a free strictly confidential consultation and can advise you of options that you may not even know are available that can help you. Attorneys who handle bankruptcy cases can be especially helpful because they know how to stop a foreclosure auction immediately to give you the breathing room you will need to get back on your feet.

Attorney Richard S. Ravosa practices law at Town & Country Legal Associates, with offices in Boston and Natick. Several of his cases have been cited in the Massachusetts Bankruptcy Reporter and he has been featured with his clients on Boston and Springfield television news broadcasts, as well as on the front page of the Sunday Republican newspaper and quoted in the MetroWest Daily News. Attorney Ravosa hosted a popular weekly call in radio show on bankruptcy, foreclosure prevention and debt relief that was broadcast throughout New England on WBNW, 1120 AM, in Boston. He also founded the Massachusetts Debt Relief Foundation, Inc., a nonprofit organization that provides pro bono bankruptcy attorneys to Massachusetts residents who have found themselves in debt through no fault of their own, and assists them in overcoming debt with dignity. He can be reached at: Mr.Ravosa@gmail.com

Home, Hospital, evening and weekend appointments are available throughout the entire Commonwealth of Massachusetts for clients with disabilities or no transportation. Other meeting locations available by appointment.

Thank you for visiting the Massachusetts Foreclosure Center.