Nobody is surprised by a foreclosure. You make the monthly payment and you know when it will be late or not made at all. When you know this it is time to act.
You need to:
- Recognize the problem
- Assemble your documents
- Make a plan
- Be represented
- Stay in the house
1. Recognize the problem.
Being in denial will make it worse. Face the problem now and with help you can turn it to your advantage. If you have lost income or had excessive expenses and your income is less than your outgo, deal with it. Living on plastic will come to an end. The problem will still be there and maybe worse.
2. Assemble your documents.
You need a handle on your exact income and expenses. Mortgage modification will require documentation. Assemble current credit and loan statements, the last two years of tax returns, copies of utility bills, bank statements for the last three months and statements of any and all asset accounts. These will help you better understand your situation, make plans and deal with your lender.
3. Make a plan.
Your plan is a budget and will include your legal strategy in defending the foreclosure. Your plan will involve getting your expenses to be less than your income. If you have already maxed out all of your credit cards you are already on an involuntary cash only plan. If the foreclosure is not yet filed you will now know for certain whether or not it will be coming. Foreclosure may actually be a necessary part of your plan. Once you have a plan stick to it.
4. Be represented.
You should have consulted with an attorney when you recognized the problem. Credit obligations are contracts. There are legal rights involved. You don’t fill your own cavities, do your own surgery, or fix your own transmission because these require expertise. Your legal rights will affect the making of the plan. A foreclosure is a lawsuit. Lawsuits are complex legal procedures governed by statute, civil rules and rules of evidence. When you get served with court papers you need a lawer immediately. In Ohio for example if you do not file a properly prepared response within 28 days you can lose by default.
5. Stay in the house.
You have to live somewhere. The house is yours until a court says otherwise. The foreclosure process takes time and a lawyer with expertise in the process can either prolong the process for years or convince the lender to make a modification that works and allows you to keep your home. If you must go (read my other post to find out why that is sometimes the very best strategy for your financial future) a lawyer can help you with the move out timing.
Facing foreclosure – be active in the process. Take part in the process. The worst thing you can do is try to ignore it and hope it goes away. It won’t go away so take control.