The possibility of foreclosure is one of the most devastating things that a family can face. Even though you love your home and it meets your needs, unforeseen circumstances could make foreclosure appear imminent.
Families in MI who are dealing with foreclosure can experience nearly unbearable levels of stress. To make matters worse, the foreclosure process can drag on for months or even years, prolonging the emotional pain beyond what anyone wants.
Thankfully, there are several options available to those in MI facing foreclosure, and you may have more options than you realize. In Southwest Michigan, there are numerous legal strategies to help avoid foreclosure that you can implement to resolve the issue and move forward with your life.
This blog post will discuss three ways, among others, to avoid foreclosure. The aim of these strategies is to provide legal and ethical solutions to help you avoid foreclosure and reduce the pain and frustration associated with it, while minimizing any long-term financial commitments or burdens. It is important to note that not all of these strategies may be applicable to your specific situation, but you may find at least one of the three ways that could work for you.
Strategy #1: Work out a deal with your lender
The initial strategy is referred to as a “foreclosure workout.” In a foreclosure workout, you will meet with your lender and inform them that you are unable to fulfill your current mortgage obligations but would like to come up with a solution to keep your home and continue to make payments.
It is a common misconception that lenders want to foreclose on homes. In reality, they prefer satisfied customers who make their mortgage payments on time. Therefore, lenders are often open to working with homeowners to find a solution. This could involve a temporary suspension of mortgage payments or a catch-up plan where outstanding payments are distributed over time for repayment. Alternatively, the solution could include restructuring the outstanding amount owed to make payments more manageable for the homeowner.
Strategy #2. Bankruptcy
While it may appear to be a drastic measure, filing for bankruptcy is one of the tools available in your foreclosure avoidance toolkit. By filing for bankruptcy, you are informing all of your creditors that you are unable to make payments on your debts. Filing for bankruptcy will put an end to the foreclosure process since all creditors must halt the collection process.
However, it is essential to note that filing for bankruptcy can have significant consequences. It may be necessary to liquidate some of your assets to settle your debts. Additionally, a bankruptcy filing can have long-lasting effects on your credit score, affecting your ability to obtain loans, purchase a car, or even secure a job. Therefore, bankruptcy should not be your first option but rather considered as a last resort in your foreclosure avoidance plan.
Strategy #3. Short sale help for a foreclosure in Southwest Michigan
The third strategy is known as a short sale, which involves selling your home and using the proceeds to pay off your outstanding mortgage balance. A short sale is a popular option for those facing foreclosure as it is a proactive, fast, and effective solution.
- The short sale strategy is proactive, which means you take control of the situation, reducing the stress associated with foreclosure. Taking action and being proactive can help alleviate the stress that comes from feeling like the process is entirely out of your control.
- Short sales are known for their speedy resolution, and in some cases, homeowners can sell their properties within a week. This fast process is often due to the support of local organizations, such as I Buy SW MI, that offer assistance to individuals going through short sales. By providing local resources and support, the short sale process can be more efficient and effective.
- One of the most significant benefits of the short sale strategy is its effectiveness in wiping out or significantly reducing the outstanding mortgage amount. In some cases, the sale of the property can cover the entire outstanding mortgage, leaving the homeowner with a clean slate. If there is a remaining balance, you may be responsible for it, but it may be possible to negotiate with your lender to reach a favorable agreement. Overall, the short sale strategy is an effective solution that can help you avoid foreclosure and move forward with your life.
With a short sale, you still end up with the reality of having to leave your home but there is a bright side: The impact to your credit is much less (compared to a bankruptcy or a foreclosure) so this is a smart long-term play to give yourself some options.