Owning a home is a milestone for many Americans. Unfortunately, there may come a time when you are unable to make your mortgage payments on your home. From losing an income to suffering an injury, outside influences may result in your inability to make ends meet.
If you are in this situation, you may wonder if bankruptcy is the only way to avoid foreclosure on your home.
Downsides of bankruptcy
In certain cases, bankruptcy can help you keep your home. However, this is not a guarantee, and depending on which Chapter you qualify for, you may still lose your home. Additionally, bankruptcy negatively affects your credit score for up to 10 years after the fact. It is easy to understand why you may want to avoid bankruptcy, as well as a foreclosure.
Keep in mind, however, that in certain cases bankruptcy can help you keep your home and discharge other debts.
Alternatives to bankruptcy
Bankruptcy is not the only available defense to foreclosure. FindLaw references the following options as bankruptcy alternatives:
- Establishing a repayment plan based on your current economic situation. This may even result in a temporary decrease in or suspension of your mortgage payments.
- Modifying your mortgage by extending the loan or refinancing the debt, or both.
- Obtaining a one-time payment from the FHA-Insurance fund to help bring you current on your payments.
- Selling your property for less than the total balance you owe.
- Returning the deed to the lender in exchange for avoiding foreclosure.
While not all of these options may be desirable, and you may not qualify for all of them, they are alternatives to having your house foreclosed on.
While foreclosure may seem unavoidable in some cases, there are options that can help you get back on your feet.