How To Avoid Foreclosure

Contact your existing lender

The first thing you will want to do if you are in or facing foreclosure is contact your lender. Most lenders are willing to work with those who have missed payments or have defaulted on their loans. 

Some of the options they may offer are:


Sometimes a lender may agree to a short term payment plan, normally between six and eighteen months if you have fallen behind on your payments due to unforeseen circumstances including loss of employment, medical bills, or other financial hardships.

A payment plan usually includes the normal monthly payment plus the back payments divided by the length of the term of the payment plan. 


Or maybe the lender will agree to reinstate the delinquent loan through the payment of a lump sum or a schedule of payments. If you are behind in your payment by $3,000, for example, the lender may allow you to pay the money back through installment payments over six months. Or allow you to pay a reduced monthly payment until you are in a position financially to pay any remaining arrears in one lump sum.
A forbearance agreement will not usually exceed more than 12 months.


A loan modification is a change in the terms of the original loan. This could include re-amortizing the remaining balance, decreasing the interest rate, or extending the term of the loan.


Deed-in-lieu is when you can´t pay your loan obligation so you give your property to the lender. The lender may then sell the property in order to retrieve some or all of the amount borrowed from the sale proceeds. There could be consequences to this method and before you sign anything you should talk to an attorney and/or tax advisor.

File bankruptcy

Filing bankruptcy should be rushed into. It stays on your record for 10 years and can have significant negative impact on your life for this duration. Due to recent changes in the law, many of the benefits of filing bankruptcy have been removed. Think long and hard before using this remedy and be sure to talk to a Bankruptcy attorney before making any decisions.

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