You probably already know that making your mortgage payments on time every month is very important if you want to keep your home. Failure to do so can ultimately end up costing you your home and ruining your credit score. Your mortgage loan documents are binding, and if you aren’t able to hold up your end of the deal, your bank or mortgage company can lawfully foreclose on your house and sell it to get the money that they loaned to you. If the foreclosure sale results in sale proceeds that are less than the amount you owe your bank or mortgage company, you owe the balance.
What about late payments? If you’ve never been late before, making one mortgage payment a few days late won’t send you into foreclosure, but make sure you communicate with your lender to let them know the payment will be late, and why. They may ask you a few questions to determine if you are at risk for missing payments in the future, but for the most part, being late by a few days, one time, is not likely to cause you a problem.
However, what if you miss one entire month’s payment? This may be due to many factors, but for now let’s assume that you only miss one month’s mortgage payment, and you are able to make the subsequent months’ payments on time. This, essentially, causes you to be chronically one month behind on your mortgage. Until you are able to make two payments in one month, your mortgage will technically be in arrears. Yes, you “only” missed one payment, but to your lender, every payment is important.
Can your lender foreclose on your home if you miss one payment but then continue to make all subsequent payments on time? Yes. While we cannot officially speak to the probability of this becoming an actuality, it’s not likely, at least in our experience. However, it is important that you are in regular contact with your lender to ensure that foreclosure is not in your future.
If your money trouble really was a one-time-only event that is extremely unlikely to recur in the future, you may be able to negotiate a way for you to pay back the missed payment in increments. Your lender may also allow you to tack that missed payment onto the end of your loan.
Whether your financial difficulty was short-lived or if it looks like you may have some continual struggle in the future, it is important to consult with a foreclosure experienced attorney. S/he will be able to negotiate with your mortgage lender so that you don’t have to.
At our law firm, we frequently file Chapter 7 bankruptcy cases, and then commence negotiating a home loan modification for our clients who are behind on their mortgage or are facing foreclosure. The Chapter 7 stops the foreclosure sale, gets rid of unsecured debt and some tax debt and enables us to negotiate a modified home mortgage payment that is more affordable for our clients. Many law firms insist that the only way to retain a home that is posted for foreclosure is to place their clients in a Chapter 13 bankruptcy case and subject them to a three to five year wage garnishment in order to retain their home. We have found that this is simply not necessary and not in the clients’ best interests. A Chapter 7 bankruptcy, which only lasts three months and requires no wage garnishment, is a much more advantageous resolution for our clients of their financial problems and allows them to keep their home when coupled with a home loan modification that we file for them.
Let Erin Shank’s 32 years of bankruptcy experience and foreclosure prevention find you the best solution to retain your home. Call (254) 296-1161 today for a free initial consultation.