There is little scarier than realizing you can’t make your mortgage payment. You can’t turn on the news or pick up a paper without hearing horror stories about the mortgage crisis. You worry about becoming another statistic, a casualty of the recession. Don’t panic yet. As a bankruptcy lawyer, I see this all the time and in most cases, you can find a way to recover before your home is in danger.Your first step should be to contact your mortgage company. Be honest about the situation and ask them what your options are. How late can you be before they refuse to accept a partial payment? Can you make up the deficiency over time? See if they have any suggestions they can offer you and write down everything you are told, trying to get the name of the person who told you and a direct contact number. Particularly with larger companies, it is easy to get inconsistent information.
While you are trying to do damage control, you need to ask yourself why you are falling behind. Is this a one time problem or are things slowly getting worse? If it’s a one time problem, remember that the mortgage company doesn’t have to work with you, but if you contact them before they contact you, they frequently will. If not, consider your priorities. If your goal is to keep your home, pay the mortgage before any other bill. If you are falling behind on other debt, make arrangements with your other creditors, so you can protect your home. Yes, falling behind on credit cards can create late fees, but being late one time in a year will no longer cause your rates to go up.
If this isn’t a one time problem, you may need to take a harder look at your finances. Are you on the upswing? Did you have a job loss, medical crisis or other reason money fell short? Do you just need a little more time or are you now struggling just to pay the minimums on your bills each month? If the issue is just timing, see if you can get a hardship modification from the mortgage company. Remember though that more fail than succeed. If your only hope to get caught up is the cooperation of your mortgage company, try that first, but call a bankruptcy attorney too.
Depending on how far behind you are and whether you have a realistic ability to catch up, if given time, you might be advised to consider a Chapter 13. It would let you catch up your payments over three to five years and start fresh with the next month’s payment. If even that would be more than you can manage, talk to an attorney about whether a loan modification might help you or whether it’s time to let go. In our practice, we won’t charge for the consultation that will help you answer those questions and make the best decision for you and your family.