Many homeowners lose their homes to the foreclosure process through lack of action. There are a number of ways to avoid losing your home, and there may even be a way to stop a foreclosure sale on the same day it is scheduled to happen. Waiting too long to respond to a foreclosure notice, or failing to react altogether, will limit your options as the foreclosure auction date draws nearer. Most methods for saving your home from foreclosure need to be attended to early on in the foreclosure process or even before the process has begun, at the first signs of financial trouble.
Consult with your lender. Ideally, you should arrange a face-to-face meeting with your lender, if possible. Consider selling other assets to come up with the necessary funds to make your mortgage payments current. Let your lender know of your intentions, and negotiate payment arrangements.
Pay what you owe. Some states like California allow you to satisfy your mortgage default within up to five days of the scheduled public auction. Contact your lender to find out the absolute latest deadline for which it will accept payment to stop the foreclosure sale and the minimum amount it will accept.
Borrow the money. Work out a cash loan arrangement with a family member, friend or business partner that covers all payments owed, penalty fees and any attorney’s fees incurred by the lender for which you may be responsible. Stop the foreclosure sale on the same day by contacting your lender to arrange payment of all monies due.
File for bankruptcy. When you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into effect immediately and requires all creditors to stop their collection activities, including a foreclosure sale. The sale is postponed pending a bankruptcy ruling, typically for three to four months, during which time you may not be making mortgage payments and can save enough money to satisfy your default.
Hire an experienced bankruptcy attorney. Particularly if your goal is to keep your home by stopping the foreclosure process, it is advisable to have a qualified bankruptcy attorney to help you successfully complete the process. All actions taken to stop a foreclosure must be agreed to by the lender, with the exception of a Chapter 13 bankruptcy, which prevents a lender from foreclosing on you for the duration of the three- to five-year repayment period.
Keep in mind that filing for bankruptcy has its drawbacks. If you are still unable to meet your debt obligations, bankruptcy will only delay the inevitable, and your credit score will suffer. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires you to obtain credit counseling within 180 days before filing for bankruptcy. Filing for bankruptcy to stop a foreclosure sale on the same day may result in your house being sold anyway, as there will be a delay in the lender getting the information, in which case you may be struggling to reinstate your title to the property for months to come.
Based in California, Debbie Donner is a freelance online writer who primarily writes articles related to personal finance. Donner received a Mensa scholarship in 2006 while attending California State University, Fresno. She holds a Bachelor of Arts degree in liberal arts and a multiple-subject teaching credential.