Falling behind on your bills can easily occur if you experience a major hardship in life, such as a divorce, illness, or the loss of a job. If this happens and you fall behind on your mortgage, you should be prepared to receive foreclosure documents from your lender. Receiving these documents is not a pleasant event in life, as it could cause you to lose your home, but receiving these papers could also motivate you to do something about it. Here are two options you could consider using that can stop foreclosures from occurring:

Loan Modification

A loan modification is an agreement between a homeowner and a lender. Homeowners use it to restructure their mortgages for two purposes:

  1. To catch up on past-due amounts
  2. To make the loan terms more affordable

If you are interested in this option, you should realize that it is not easy to do. A loan modification requires a lot of paperwork, and there are a lot of deadlines you must meet. If this sounds like a good option to you, consider talking to a bankruptcy attorney first. Many bankruptcy lawyers specialize in helping people with loan modifications, and using this option would help you have more success if you choose to do a modification.

File for Bankruptcy

The downside to loan modifications is that lenders are not always willing to let homeowners use them. If your lender will not work with you on this, a loan modification will be out of the question. If this happens, you could consider filing Chapter 13 bankruptcy.

Chapter 13 bankruptcy will put a stop to a foreclosure, which means you will be able to keep your home. With this option, your lender must agree to a repayment plan, which will last between three to five years. Over the course of the three to five years, you will be required to make payments on your house, and these payments may be different from the amount you were paying. You cannot skip any of the payments, though, which is important to know.

When the three to five year period is over, your loan terms will return to their original terms. Chapter 13 is a great option to save a house from foreclosure, simply because the lender will not have a say in it.

If you want to keep your house and have received foreclosure papers, you must act quickly. Contact a bankruptcy lawyer today to find out what options you have for saving your home.