There are few things more devastating to families than the prospect of a home foreclosure. You own your home and you love it — it serves your family well. Yet, due to unfortunate circumstances and pressures from the economy, foreclosure may seem imminent.
For local TN families who are facing foreclosure, the stress can be almost unbearable. To top it all off, the foreclosure process can take months or even years, stretching out the pain of this process for longer than anyone wants.
Fortunately, you do have options available to you here in TN — perhaps more than you might realize. There are many strategies that will help you through a foreclosure in Knoxville; these are legal foreclosure avoidance strategies that you can implement to help you resolve your foreclosure issue for free so you can get on with your life.
In this blog you’ll read about the 3 ways that you can avoid foreclosure (there are other ways to avoid foreclosure too but we’ll keep this post concise). The goal of these strategies is to help you legally, ethically, and quickly avoid foreclosure and reduce the pain and frustration you’re facing, while minimizing any long-term financial commitments or burdens to you. Not all of these strategies will apply in every situation for every home owner, but you’ll probably be able to find at least one of the three ways should be helpful for you.
Strategy #1: Work out a deal with your lender
The first strategy to implement is called a “foreclosure workout”. In a foreclosure workout, you’ll sit down with your lender and tell them that you don’t think you can pay your current mortgage obligation but you’d like to figure something out so you can stay in your house and continue to pay your mortgage faithfully.
Contrary to popular belief, lenders don’t want to foreclose on you! They want happy customers who pay their mortgages, so lenders are often willing to work with homeowners to figure out a deal! This might include a temporary reprieve on your mortgage payments, or it might include a catch-up strategy where your outstanding mortgage payments are spread out so you can catch-up and pay them off, or it might include a restructuring of the outstanding amounts that you owe.
Strategy #2. Bankruptcy
Filing for bankruptcy may seem like an extreme measure but it is one of the “tools” in your foreclosure avoidance toolkit. When you file bankruptcy, you indicate to your creditors that you are no longer able to pay your bills. Filing for bankruptcy will put a stop to the foreclosure process because all creditors must stop the collection process as soon as they receive notice.
Filing for bankruptcy, though, is a little extreme and has harsh consqequences to your credit: it may require you to sell some of your assets in order to pay off creditors. And, a bankruptcy will remain on your credit score for many years, which could impact everything in your future from getting a loan to getting a car… even getting a job. So this shouldn’t be your first line of defense!
Strategy #3. Short sale help for a foreclosure in Knoxville
A short sale is the third strategy — this is where you sell your home and put all proceeds of the sale toward the amount you owe on your mortgage loan. A short sale is the preferred method for people facing foreclosure because it is proactive, fast, and highly effective.
- It’s proactive, which means that you take matters into your own hands (having that control over your sale is a major stress eliminator because the majority of stress in foreclosure comes from sources normally out of your own control).
- It’s fast — in some cases, you can sell your home in less than a week! That’s also because it’s local: You can get foreclosure help in Knoxville since organizations like Southern Sky Home Buyers help people going through short sales and foreclosure.
- It’s highly effective because a short sale can completely wipe out (or almost wipe out) the amount you owe on your mortgage. If there is any amount left over that is not covered by the sale of the property, you’ll be responsible for it at closing (although you can sometimes work out a deal with your lender so everyone walks away whole).
With a short sale, you will still end up with the reality of having to leave your home but there is a bright side: The impact to your credit from a short sale is much less (compared to a bankruptcy or a foreclosure) so this is a smart long-term play to give yourself the most advantageous options going forward.