When you fall behind on your mortgage payments on your Philadelphia home, it can feel like you’re drowning in debt.
Even if you’re able to make your monthly payment, catching up on a past due balance can be an overwhelming challenge.
There are a few options that can help you to avoid foreclosure in Philadelphia and maybe even keep your house, even if you’re seriously behind in payments. Lots of properties in Philadelphia have been lost to foreclosure, but there are many ways to avoid it.
Help, I’m Behind in My Mortgage Payments in Philadelphia! 5 Things You Can Do To Help Your Situation
This is usually the tool of last resort. If you’re being crushed by lots of debt, bankruptcy can be a good way to negotiate with lots of lenders at once. It’s a lot of work, and it won’t help you avoid your mortgage but you may want to consider it. Different lenders will treat your circumstances in unique ways. There are two specific types of bankruptcy you should know about: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
When you file for Chapter 7 bankruptcy, the court places an automatic temporary stay on your current debts. Essentially, this prevents creditors from collecting payments, garnishing wages, foreclosing on your home, repossessing your property, evicting you, and even turning off your utilities. In this situation, your assets become part of the bankruptcy estate. The automatic stay provides the trustee time to sell or liquidate the assets that would have been otherwise foreclosed on. Subsequently if the trustee sells the assets for enough money, you may be entitled to a portion of the proceeds.
When you file for Chapter 13 bankruptcy, you have three to five years to resolve your debts by applying your disposable income. This option allows you to eliminate unsecured debts while catching up on missed mortgage payments. Chapter 13 bankruptcy also allows you to avoid foreclosure and remain in the house. However, you must take into consideration that you will be required to spend years living under the supervision of a court-appointed trustee who will collect and allocate your payments.
The automatic stay basically allows you additional time to deal with the pending foreclosure.
This can be a good card to play, but it may come with some unseen penalties. Basically, reaffirming the loan is an additional commitment to pay. It is a voluntary agreement a debtor makes with a lender to pay some or all of the debt that is owed regardless of going through bankruptcy proceedings . By entering into a reaffirmation agreement, a borrow typically maintains possession of the asset as a form of collateral as long as they can fully repay the amount owed on the loan.
Reaffirming your loan can be helpful because it is noted by credit report agencies which then register that individual is making regular, on-time payments. So this is beneficial to people who are trying to rebuild their credit after bankruptcy. However, borrowers who are only looking to absolve themselves of their debts and are not likely to make regular payments have no reason to reaffirm a loan. Reaffirmation makes a borrower liable for the debt and is arranged through a legal process with the courts for the borrower to protect themselves and along with their assets.
3. Making Home Affordable (MFA):
If your mortgage qualifies, you might be able to participate in MHA. Making Home Affordable is apart of the Trouble Asset Relief Program which was the federal governments response to the subprime mortgage crisis that occurred in 2008. The main objective if MHA was to help eligible homeowners by lowering their monthly mortgage payments to something that was manageable for them. Any loans backed by Fannie Mae or Freddie Mac must be considered for MHA, and other lenders that choose to participate in MFA.
With MFA, your payments and/or interest rates might be lowered – even the principal balance (if your home is worth less than you owe). MHA is able to help homeowners avoid foreclosure by allowing them to modify or refinance their mortgages, get temporary forbearance if they are unemployed or completely transition out of a home through a short sale or deed-in-lieu of foreclosure.
If this program sounds like it may help you with your mortgage payments then check out this site for more information. MFA is a government program, so be prepared to deal with lots of paperwork. It ain’t free money – you gotta work for it.
4. Negotiate with your bank:
Lots of lenders routinely offer some level of assistance. You have to work hard at it, but you might be able to get your interest rate reduced or a temporary reduction in your payment.
Most of the time, lenders will want to steer you to refinance your loan – but by the time you’re a few payments behind, you probably don’t qualify for a reduction in interest rate.
You have to work really hard to negotiate with a bank. Usually, it takes lots of calls and the patience of a saint to get through the bureaucracy. Never, ever act rude. Ask for help from everyone you speak with, but don’t sound desperate. Explain your situation, offer supporting documents, and reassure the bank that you want to live in your home for the long term.
If you’re in need of a temporary fix and want to stay in your home, most banks can be forgiving. Sometimes they’ll be willing to add a few months of payments back onto the primary balance of your loan. It’s all dollars and cents to them, so remind them that you need their help to give them a lot more money in the long run. If they have to sell your house at a foreclosure auction, they’ll take a huge loss.
That sounds obvious, but for some reason, bankers seem to forget it when saying no to someone in need of help.
5. Borrow money from a private investor:
If you’re behind on your payments and need to sell fast, we can help.
In certain circumstances, we may even be able to help you stay in your home.
We work with homeowners in Philadelphia to find solutions to foreclosure problems.
We’ll let you know how we can help.