Falling behind on mortgage payments might lead to foreclosure. When someone suffers from financial difficulties, making home payments each month may become challenging. Even submitting partial payments might prove harder than expected. When a California homeowner falls several months behind on a mortgage, foreclosure proceedings could start. Those intending to file bankruptcy may utilize federal laws to address the situation.
Missing mortgage payments and foreclosure
Those who are not entering into bankruptcy may attempt to work directly with the lender to deal with the situation. Contacting the lender at the first sign of payment troubles could help the situation but only for so long. The lender expects to receive payment, and some borrowers might be unable to do so.
The inability to make mortgage payments might be part of a larger financial problem. Someone whose debts greatly exceed their assets may find it challenging to pay any bills. Massive debt could lead the person to look into Chapter 7 or Chapter 13 bankruptcy. Regardless of the bankruptcy category, the individual may find some relief from foreclosure attempts.
A request for a loan modification could also help the situation. Reducing the interest rate or monthly payment might be preferable to foreclosure for all parties. Still, the borrower might have to file for bankruptcy due to a challenging financial situation.
Foreclosure and bankruptcy
When someone files for bankruptcy, a relief against foreclosure goes into effect due to an automatic stay. However, when the borrower has already received a foreclosure notice, the lender might ask the bankruptcy court to lift the stay.
One option for a bankruptcy filing involves surrendering the home to the lender. While some individuals do not want to lose the property, such actions could prove preferable to bankruptcy. It’s important for homeowners to do their due diligence before deciding on an option.