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What are my options to avoid foreclosure?

If you are in danger of losing your home, you may understandably be researching your options. First, know that you are not alone. According to RealyTrac, one in every 730 homes in Illinois is dealing with foreclosure. You can avoid becoming a statistic by knowing your options.

As Federal Trade Commission points out, one of the first steps you should take is to try to negotiate with your lender. At the very hint of difficulty making payments, you should phone your mortgage company to discuss the terms of your loan. In some cases, the lender will work with you to come up with a plan so you can stay in your home. You might be able to agree on a lower interest rate or deferred payments.

The FTC points out that you may also qualify for the Making Home Affordable Modification Program. This government assistance will lower monthly payments to just 31 percent of your monthly gross income. To qualify for the program, you must meet the following requirements: 

  •        You obtained the mortgage before Jan. 1, 2009.
  •        You use the home as your primary residence.
  •        A financial hardship (such as medical expenses or unemployment) is resulting in the trouble making payments.
  •        You owe less than $729,750 on your first loan.

Even if you do not qualify for this program, you may have other options. For example, you might be able to sell the home before the lender forecloses on it. You can also apply for a deed in lieu of foreclosure, which transfers the deed of your home to the lender.

If all else fails, you may want to consider filing for bankruptcy. Bankruptcy filings put an automatic stay on all your debts, including your mortgage. If you file for Chapter 13, you should be able to stay in your home under a new payment plan.

While this information may be useful, it should not be taken as legal advice.

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