If you're in danger of losing your home because of an inability to make mortgage payments, don't despair. Things like Chapter 13 were put in place to stop foreclosures.
As more and more American homeowners default on their mortgages and risk losing their houses, judges and lawyers are discovering new ways to prevent foreclosure from forcing families out of their homes.
Experts who have studied the ways in which Americans react to foreclosure have noted that most people don't take action soon enough - that is, when they begin to realize that monthly payments are more than they can reasonably afford.
With that in mind, here's how to tackle foreclosure with help from both traditional wisdom and the latest courtroom decisions to help you.
Many resources recommend contacting your mortgage lender as soon as you realize that you aren't able to meet your mortgage requirements. Taking action sooner, rather than later, will likely give you more leverage since your loan won't yet be in default.
The automatic stay in bankruptcy halts all legal actions, including foreclosures. By filing bankruptcy, you give yourself breathing room and a chance to get caught up on past payments so that you can receive your discharge and get a fresh financial start.
If you were unable for some reason to halt foreclosure proceedings, you can still fight them in a court of law. The July 2008 issue of the American Bankruptcy Association Journal notes that, as judges hear more and more foreclosure cases, they are accepting more and more defenses.
Because of recent FBI and IRS criminal investigations into the mortgage industry's handling, packaging and securitization of subprime loans, judges are apparently more open to the idea that lenders could be in the wrong in foreclosures.