Can you save your house?

Foreclosure is tough. Nobody wins. Not the banks, not the lenders. Believe it or not, it is in the bank's interest to find a way to make this work, so that you can keep your house and they can get paid. No bank wants to take a loss on real estate if they don't have to.

Home retention programs abound. But the important question to ask yourself, the brutally honest question is, "can I afford to keep this house." If you got into trouble because you lost your job but now you are working again, you may be able to work something out with your lender if your income supports home ownership. There has to be income, verifiable income that you can show from your taxes, 1099 and a financial worksheet.

As I may have said before, if you got an "exotic mortgage" like a income only mortgage, or negative amortization loan, or a subprime (high interest) loan, you would be, by law, entitled to a 90 day notification, and you get a mandatory conference after 60 days. That gives you a lot of time to try to make this work out in your favor - if you have income and home ownership is possible.

But the lender is only going to agree to something that is sustainable. If all else fails, as a last resort, you can consider a chapter 13 bankruptcy which also allows you to keep the home, but this should only be used as a last resort. With a chapter 13 you will get a mandatory payment plan, and you will have to make provisions to pay the arrears that have built up.

Of course, if you are having trouble paying your mortgage in the first place, and now you have to pay the mortgage and the arrears, it doesn't sound like much of a solution, and for many people, a chapter 13 is not really a solution. It only works if you are working now, and you will be able to make payments, or you have a buyer for the property, and you need to stop the auction which is scheduled before the closing. Otherwise, if you just don't have income, it doesn't make sense to file a chapter 13.

Both a chapter 13 and a foreclosure will negatively impact your credit report for a very long time.