Foreclosure is a legal process whereby a lender sells your property to pay your mortgage debt. If you have a mortgage on your home and fall behind on your payments, foreclosure is a real threat which could cause you to lose your home. There are solutions available, however.
This is the most straightforward solution, requiring you to become current on the mortgage and all penalties and interest. Often, though, this is not possible. Your Phoenix bankruptcy attorney can discuss other solutions with you, including the following.
Rent the Property
You could use the rental income to pay your debt. While this may seem ideal, your rental income must be sufficient to pay the mortgage and all other costs associated with the property, including insurance, taxes, maintenance, upkeep, and homeowner’s association dues. Plus, you will have to pay rent yourself to live somewhere else. Your rental income may not be enough to meet these expenses.
With sufficient equity and credit, you may qualify for a refinance. However, due to loan origination fees, appraisals, etc., you might find that the cost of a refinance is greater than its benefits.
Your Phoenix bankruptcy attorney might negotiate a forbearance with the bank, meaning your payments could be suspended or reduced for a period of time to allow you to get back on your feet.
This would allow you to keep your house with reduced or altered monthly payments, and is negotiated for with the bank. It is important to consult with your Phoenix bankruptcy attorney, though, since you could incur a significant tax bill if your loan obligation is reduced.
A Chapter 7 bankruptcy will probably result in the loss of your home but also reduce or eliminate your mortgage debt. A Chapter 13 could save your home and alter your monthly payments.
Short Sale or Deed-in-Lieu
Both of these mean you would lose your home, but through these measures you could reduce or eliminate your mortgage balance. Again, however, due to possible negative tax consequences, it is important to consult with your Phoenix bankruptcy lawyer.