Founding Attorney
Homeowners may fall behind on their mortgage payments for many reasons. Unemployment, sudden accidents, illnesses, divorce, and many other life events can result in mortgage payments falling behind. If you find yourself in this situation, don’t give up. Instead, review your options for addressing past-due mortgage payments with a Massachusetts bankruptcy attorney.
What Steps Should I Take if I Fall Behind on Mortgage Payments in Massachusetts?
The first step is not to panic. This situation is more common than you believe. You may be able to catch up on the mortgage payments by working directly with your lender.
If the reason you fell behind on payments is temporary, your lender may work with you to allow you some time to catch up on the mortgage payments. However, the lender can change their mind and begin foreclosure proceedings anytime if the agreement is not in writing.
Other options for dealing with past-due mortgage payments include:
Loan Modification
You may qualify to modify your mortgage if you fall behind on the payments. Modifying your mortgage may include lowering the payments or interest rates to make the mortgage payments affordable. Your lender may extend the term of the loan or reduce the balance of your loan by forgiving the past-due payments.
The loan modification process can be time-consuming and confusing. An attorney can help you apply for a loan modification and ensure you are not the victim of predatory lending practices.
Refinancing a Mortgage
Some homeowners refinance their mortgage when they fall behind in making the mortgage payments. Refinancing involves paying off your current loan by taking out a new loan. However, your credit rating may be damaged if you are behind on your payments. Therefore, you may not qualify for a new loan, or the terms of the new loan may not be favorable.
Filing Bankruptcy
You can stop foreclosure and possibly keep your home if you file Chapter 13 bankruptcy. Chapter 13 is a reorganization of your debts into an affordable repayment plan.
In Chapter 13, you include the past due mortgage payments in the bankruptcy plan. Therefore, instead of paying the past due payments in one lump sum, you can spread them out over a 36 to 60-month period. You also include other debts in the plan, which can reduce your monthly debt payments. Doing so can make it affordable to keep your home. Many individuals pay just cents on the dollar to get rid of their unsecured debts.
If you want to give up your home, Chapter 7 bankruptcy may be a better option. In Chapter 7, you can surrender your home in full satisfaction of the mortgage debt and other liens secured by your home. You do not need to worry about a deficiency judgment if the home is not worth what is owed to the lender. Furthermore, Chapter 7 can help you get rid of your unsecured debts and give you a fresh start after a financial crisis.
Contact Our Massachusetts Bankruptcy Attorneys for More Information
Dealing with past-due mortgage payments is stressful. We can help you explore your options if you fall behind on your mortgage payments. Contact our Massachusetts bankruptcy lawyers to discuss your case during a confidential consultation.