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Helping good people through bad times

What can be done if you are facing foreclosure?

Owning a home is part of the American dream, but for those in Tennessee who have fallen on hard times, this dream can become a nightmare, especially if they have missed mortgage payments and are now facing foreclosure. However, it may help individuals in such situations to contact their loan servicer to see if there are any options to help them to prevent foreclosure.

One option may be a forbearance. In a forbearance, an individual's mortgage payments are either lowered or deferred for an agreed-upon time frame. Once that period is up, the individual will begin making their mortgage payments again, along with either an additional one-time payment that brings their mortgage up to date, or alternatively further partial payments for a period of time to bring their mortgage up to date. This option may work for those whose inability to pay their mortgage is temporary.

Another option may be loan modification. In a loan modification the home owner and the loan servicer agree to permanently alter the terms of the mortgage so that the home owner can afford making regular mortgage payments. This option may work for those whose inability to pay their mortgage is more long-term.

A third option that some individuals may want to consider is simply selling their home. If the real estate market for sellers is good in the individual's area, the individual may be able to sell his or her home for enough money to allow that individual to completely pay off the rest of his or her mortgage.

Finally, there is the option of filing for bankruptcy. Bankruptcy may offer an individual who cannot pay of all of his or her debts the fresh financial start the individual needs to move forward with his or her life. In fact, in some cases, such as a Chapter 13 bankruptcy, a three-to-five year payment plan can be established that may make it possible for an individual to keep his or her home.

Missing mortgage payments is certainly a stressful situation, but loan servicers may be able to work with individuals to save their homes. And, of course, bankruptcy may be the most viable option for those whose total debt is simply unmanageable. Bankruptcy attorneys may be able to help individuals decide what steps to take to address their mortgage debts.

Source: Federal Trade Commission, "When Paying the Mortgage is a Struggle," accessed May 9, 2016

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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