How To Stop Repossession.
Take legal and financial advice.
A good legal adviser will make sure the lender is following the
law and not making it difficult for you to make payments and clear
your debts. They can also help you if you need to go to court.
They can explain the process and make sure that you have all the
supporting documentation you need.
Have all your correspondence with all the parties involved
in a file. List details of all your expenses and income history.
This will show that you are organised. You may even have a plan
on how may sell your house quickly. Preparation may help convince
the court that you need extra time to sort out some loose ends.
USA: Contact the Housing and Urban Development Department (HUD)
to locate a government approved counseling agency. Their website
at http://www.hud.gov also has
good information on options, as well as information on the New
Jersey Fair Foreclosure Act.
Basic lending guidelines require all liens on the property
should total less than 70% of the current market value. If you
have more equity than that, refinancing should be easy, or
get a second trust deed to bring your loan current. Expect higher
interest rates and loan fees.
USA: There are several other alternatives available. You may consider
forbearance, refinancing, modification, deferral of principal,
a temporary indulgence and a Chapter 13 Bankruptcy.
Stay in the property and don't abandon it. This looks better if
you have a court case.
Talk with your lender. Explain your problems. Explain how
you can repay the installments if given more time. Show him your
new plan. In most cases lenders are sympathetic towards their
customers: What's more costly in time and money; getting the house
off you, or giving you a bit of leeway?
USA: Try not to declare bankruptcy. It can halt or at least slow
down the repossession process, but it'll be on your credit record
for ten years. It will be visible to everyone (including future
employers), in the court records. You wont be able to declare
bankruptcy again for another eight years; you can't use that trick
again.
Going
for a bankruptcy is credit suicide. I get calls from
people looking for a loan whom _everyone_ has turned down, or
offered ridiculous terms to. The reason: they were once bankrupted.
It's better to try to salvage the situation through remortgaging
or negotiation with your creditors.
You may be told to sell your home quickly to grab the equity in
it. You need to release capital quickly to stop repossession.
There are property-buying companies
keen to complete and give you funds quickly.
But beware!
- The offer they make to you can as little as 70% of its market
value.
- As you'll not be a homeowner any more you'll likely find it
impossible to get back on the property ladder; you'll have no
equity left.
- Selling the place then renting it back from your 'saviour' could
leave you paying the same amount, in rent monthly, as your mortgage.
USA: As with any disaster, there are those who can make money
from it. In the US, there are foreclosure
specialists. If you choose to hire one of these:
- Ask them how many foreclosures they have
negotiated, and if they have any references. The best reference
is from a good friend of yours or a family member.
- Are they members of trade organisations that vet their members?
Some trade organisations just require you to pay a fee to join.
- Some promise 'no risk' solutions. This is just marketing. The
real McCoy will explain what will happen in detail, and provide
you with all the options, _including_ foreclosure.
- They may charge a flat-fee, only to proceed with foreclosure
with or without your knowledge.
- They may advertise a low fee then inflate it.
- They may charge you thousands of dollars to purchase your home
and then rent it back to you.
- They may resell your home, making a fat profit on the deal.
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