Saving a House from Foreclosure

The day you knew was coming has arrived. The bank has finally given you notice that they are foreclosing on your house. Many times life throws us curveballs that put us in a situation like this. An unexpected medical emergency, unemployment or any number of things could have set us back but we just could not get back on track before we were given notice. Is there anything we can do to save the house?

Everyone in this situation has options. The biggest being whether or not to keep the house or let it go. One path that many people attempt is to work things out with the bank. This is a treacherous road to navigate. The bank is looking out for itself and will do anything to recover as much money as possible from this situation. There are also a lot of people out there that will offer to help you by working with the bank too.

Priority number one for any one that attempts this is to get everything in writing. A workout with the bank should be in writing containing the essential terms of the deal and be signed by the bank. Any person that agrees to help you should sign a contract specifying what you are paying for and what they are going to do for you. Many people forget that they are dealing with businesses that are looking to make money. You have to protect yourself.

Another common path is bankruptcy. Although it’s not ideal this is the more secure path because you know what you are going to get out of the deal. Normally if your house is being foreclosed on so you are experiencing some sort of financial hardships. In a normal situation I would not recommend filing bankruptcy unless there are additional debts owed besides just the house but there are extraordinary situations out there that go against this.

Bankruptcy can be used to halt the foreclosure process but there are no guarantees that it can reverse it. Banks look to what chapter you file to determine their course of action. In a Chapter 7 they will normally wait to see if you attempt to reaffirm the debt or what course of action you will be taking. In a Chapter 13, depending on your filing history, they will cancel the foreclosure because they know you are going to have to put together a payment plan so instead of fighting it they are willing to take part in the bankruptcy.

Each chapter has its advantages and disadvantages so a bankruptcy attorney will be able to explain the differences and should be consulted prior to making this decision. But if you hire an attorney you are guaranteed to have someone zealously represent your interests where other methods leave you on your own to protect yourself.