I am behind on my mortgage payments. What should I do?

I am behind on my mortgage payments. What should I do?  

Bankruptcy may be a very powerful tool to prevent home foreclosure. For most people filing for bankruptcy automatically stays all collection activity, including home foreclosure. See 11 U.S.C. §362.

Bankruptcy may be filed just moments before a foreclosure sale and still effectively prevent the auction.

But what is the ideal time to file for bankruptcy?

You may want to first read your actual mortgage and note. It is very likely that your mortgage and note contain a provision that your lender can charge you for its lawyers, auctioneer and other collection related activities. The bank will also continue to charge interest and late fees. The property tax and insurance will also come due.

These fees may quickly add up and increase your mortgage arrears.

First, make sure you read your mail. Most foreclosures are done by a “power of sale” and your only notice of the auction may be a letter in the mail. See MGL c244 §14.

Second, assess your finances, why did you fall behind on your mortgage payments? Did you temporarily lose your job, have a one-time expense, or do you have a long-term hardship?

Third, how can fix the financial challenge?

Fourth, look into options to get current. Can you apply for a home loan modification, make a onetime lump sum payment to bring the mortgage current? If not, bankruptcy may give you a chance to bring the mortgage payments current overtime.

Fifth, take action, don’t wait until the day before foreclosure. The sooner you act the less expensive the fix will be.

Finally, if the foreclosure is tomorrow, skip to step five, don’t wait call me now!