Buying a home can be a dream come true for many people. Even if you worked hard and saved a substantial amount for a down payment, you will likely still need to take out a loan, which is known as a mortgage. If you fail to make your monthly mortgage payments, you could be at risk of losing your house. Foreclosure is the legal process by which the lender or bank can repossess your house. This means you will have to vacate the premises within a certain amount of time.

If your house is worth less than the amount you owe on your loan, a deficiency judgment may be entered. Not only do you lose your home, but you may owe your lender additional money to make up the difference in value, and your credit score will go down. The global coronavirus pandemic has impacted many homeowners financially. Fortunately, there are ways you can avoid going through foreclosure.

Practical Steps to Keep Your House

There is no doubt that the COVID-19 pandemic has impacted our nation’s economy. Many businesses have closed their doors, leaving workers unemployed and without their usual incomes. This has led many homeowners to fall behind on their bills, including their mortgage payments, which are often their biggest expense. While most lenders have instituted a moratorium on foreclosure proceedings during the current health crisis, the moratorium will eventually be lifted. It is a good idea to start preparing now for that reality.

When you are facing financial distress, you might explore options like modifying your mortgage loan terms or negotiating with your lender to avoid foreclosure. Foreclosure can have a substantial impact on your current and future credit, not to mention the loss of your home. If you are struggling to make your mortgage payments, a loan modification request might be the best way for you to get your debt under control.

Requesting a loan modification does not always result in an approval. Your request can be denied for a variety of reasons. In many of these cases, it is possible to resubmit the request and potentially have it approved with additional information provided. If you are facing this situation, speak with an experienced bankruptcy attorney about your options.

You Have Insufficient Credit or Income

If you are denied due to having credit issues or not enough money to afford the modified loan terms, you will have to make changes in your daily lifestyle and expenditures. For example, if you have outstanding debt, pay at least some of it. If you cannot afford to pay your entire credit card balance, even paying a portion of it can help you. Similarly, if you cannot show that you have a certain amount of available cash, make changes like selling a vehicle or cutting unnecessary expenses like cable or dining out to save money.

As efforts continue to halt the spread of the coronavirus, millions of Americans have been prevented from going to work as usual. Some are able to work from home and maintain at least some level of income, but many more do not have the opportunity or ability to do so. This means that in addition to the fears associated with contracting the virus itself, many families also fear the reality of not being able to pay their bills. To address such fears, President Trump issued an order this past weekend that effectively halts foreclosure and eviction proceedings for a large number of American families.

Freezes and Forbearance Options

On Saturday, March 21, Housing and Urban Development Secretary Ben Carson announced that the president ordered the “immediate cessations” of evictions and foreclosures. The order was intended to help the millions of Americans who might soon be struggling to make their rent and mortgage payments.

As a part of the order, several federal agencies said they were freezing foreclosures and evictions for at least 60 days. These agencies include the Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the U.S. Department of Agriculture (USDA). In addition, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, more commonly known as Fannie Mae and Freddie Mac, respectively, have instituted moratoriums on foreclosures, as well as forbearance options for those affected by the coronavirus pandemic.

For most people, it is not very hard to imagine a scenario in which they cannot afford to pay all of their bills. Maybe it starts with a missed auto loan payment or a monthly credit card payment, but all too quickly, a person is so far behind that it catching everything up might be impossible—especially catching everything up at the same time. In many cases like this, the person’s best option may be to file for Chapter 13 bankruptcy.

If your mortgage is one of the obligations on which you have fallen behind, you probably realize that your lender may soon have the right to foreclose on your home. In fact, depending on the circumstances, you might have already received notice that foreclosure proceedings have begun. Once foreclosure proceedings begin, you might be inclined to simply stop paying your mortgage, but if you have filed Chapter 13 bankruptcy, doing so could cause you more problems than it solves—especially if you hope to keep your home.

Automatic Stay in Bankruptcy

When you file for protection under Chapter 13 of the United States Bankruptcy Code, the court will automatically issue a stay on all debt collection activities—including efforts by your lender to collect your delinquent payments. The automatic stay also stops foreclosure proceedings. Your lender, however, can request permission from the court to continue the foreclosure. The court has the discretion to grant the lender’s request, but certain circumstances will make the court more likely to approve allowing the foreclosure to continue.