If a borrower cannot see any other option available to stop the foreclosure sale on their house immediately, they may declare themselves bankrupt to cover up their other debts. Some people believe that bankruptcy is the last and best option to stop a foreclosure sale and discharge other debts as well. However, many avoid filing for bankruptcy since it damages their credit history in the long run. Before you go for any option, consulting a loan modification firm is highly recommended for you. There are so many ways to stop a foreclosure sale and some of the most notable ones are mentioned below:
- Mortgage modification: This is a procedure where terms and conditions of a mortgage can be modified mutually by both of the parties; i.e., the lender and the borrower. This procedure can be followed outside the court and the bank so that you do not have to file for bankruptcy.
- HUD Loan: Usually, debtors who are facing financial problems may apply for the HUD loan which is totally interest-free. To avail the HUD loan, the borrower must be missing out on making mortgage payments for at least 12 months and the property must not fall under foreclosure.
- Forbearance: If a borrower doesn’t have a job or any other income source, they may convince the lender for suspension of mortgage payment. But if the lender’s financial situation is not strong or they need money very badly, they may avoid forbearance.
The borrower may make use of any of the above-mentioned alternatives to stop the foreclosure sale on their properties. But before proceeding, they must consider what impacts this will bring about on their other debts. If the borrower also has the burden of credit card debts and others on their shoulders, only then they may declare themselves bankrupt.