Recently, my significant other and I found ourselves facing bank foreclosure on our home. We knew it was coming. We had missed several mortgage payments while we were laid off from our jobs at the mine. Stupidly, we decided not to communicate our problems to the bank. We tried to make do with part time jobs at fast food restaurants, but trying to make all of our payments on time and still have money to buy diapers and food for the kids was very difficult. It was a scary situation to be in.
The first step in bank foreclosure is missing a payment. It does not matter why you miss that first payment, but the foreclosure ball starts rolling at that point. Once fifteen days have passed from your missed payment, the bank usually tries to contact you. If you do not talk to the bank, more problems are in store. Forty-five days later, the next step is taken. At this point, you are usually warned, in writing, that you are facing foreclosure if you do not take action immediately. If you allow another thirty days to pass with nothing, the formal paperwork will begin.
There are several steps you can take before the formal foreclosure process begins. All of these, though vary from state to state. In some states, you can file for bankruptcy. Most will allow you to keep your home as a protected asset. There are two types of bankruptcy you can file for. You can have your debts wiped out, or you can have your debts reorganized so you can continue to pay lenders as much as you can while still having money to survive on. Either way, the ability to file for bankruptcy and keep your home will depend entirely upon the laws in your state. Another thing you can do before the formal bank foreclosure process starts is talk to your lender.
Most lenders are willing to work with customers to lower payments temporarily, suspend payments for a few months until you get back on your feet, or make some other arrangements. Banks do not want to foreclose on people. There isn’t some guy sitting in an office giggling manically thinking, “Hmm, whose house can I take today?” Foreclosures are just as much hassle for the bank as they are heartache for you. The final thing you can do before the formal bank foreclosure process begins is look for resources to help you within your state. Many states have foreclosure prevention associations that will provide you with the resources you need in this difficult time.
Even with the best resources in the world, you may still be unable to prevent the sheriff from showing up on your doorstep with a foreclosure notice and giving you a few minutes to get any belongings you can grab and head for the streets where you may be spending a very long time. The important thing to remember is to try to prevent this nasty process before it starts.