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How to Avoid Foreclosure

When you're in difficult financial times and facing the possibility of foreclosure, you may start to panic and feel helpless - but there are several options that you may be able to use to help stop and prevent foreclosure from taking place. It's important that you act quickly to prevent any problematic situation from escalating beyond your control. There are, however, a few things you must ensure you do first, before attempting any of the options below.

1. Do not try to hide from the problem by ignoring letters from your lender. You will need to address the issue immediately and handle it promptly. Throwing the letters away will not stop the process.

2. Do not leave your home or relocate. Assistance is not guaranteed if you vacate the property.

3. Contact a HUD-Approved Housing Counseling Agency. These agencies often provide resources, advice and even credit counseling free of charge. They can be valuable tools in determining which option is best for you.

After acknowledging the above, you may then proceed to examine the following options:

1. Filing for Bankruptcy
If you're currently facing foreclosure, but you cannot work out any sort of deal or alternative solution with your lender, you may need to file for bankruptcy. There are two types of bankruptcy: Chapter 7 and Chapter 13. Experts recommend Chapter 13, as you may end up losing your property with a Chapter 7! However, regardless of which you file, the courts will immediately issue what is known as an Order for Relief to prevents your creditors and lenders from trying to collect.

A Chapter 13 works with you to let you pay off your debts over a specified period of time. On average, this is approximately four to five years. However, you will need a steady income that meets or exceeds what you'll pay for your mortgage - while you're still paying off your debts simultaneously. In order to prevent foreclosure and to continue living in your home, you will need to make faithful, on-time payments and keep up your end of the bargain.

2. Loan Modification
After the recent economic downturn, financial institutions have made the realization that it is more profitable for them to reach an agreement with the person in debt, rather than to have to go through the process of a foreclosure. Banks pay hefty administration fees - sometimes up to 1/4th of the total balance! Therefore, you can use this knowledge and ask the bank to modify your loan, which may save you from facing foreclosure.

3. Deed-in-Lieu of Foreclosure
A last resort option exists known as 'Deed-in-Lieu' of Foreclosure. With this option, you simply hand over your property to the lender. You're still losing your house, but the negative credit effects are not as severe as a standard foreclosure.

People qualify for this option they're in default and have no other available options to pursue, if they have tried to sell their home in the past and were unsuccessful, and do not have any other mortgages that are currently in default.

4. Short Sale.
The final option you may consider is a short sale. This process is simply where you sell the property for less than the balance you owe. This requires both you and the lender to agree to this process, and it may be ideal to the lender since they can get a portion of what is owed to them, without having to go through the trouble and expense of a foreclosure. This process also has weaker effects on your credit, which is another benefit.

It is always best to consider all possible options and seek advice from a qualified professional before trying to take matters into your own hands.

For a free consultation about a New Jersey property tax appeal, call Sharit & Deliyannis at 201-488-6338 or email: info[at]sharitdeliyannis.com