What are my Alternatives to Foreclosure?

A lot of Americans are going though the agony of facing foreclosure. Not only does a person facing foreclosure lost all the money that they did use to pay off their mortgage, they face social consequences as well. Most people feel both demoralized and humiliated when the bank formally forecloses on their property.

If you are getting close to being foreclosed on, you do have options. Let's look at a few of them now.

Deed in lieu: A deed in lieu of foreclosure is a way to avoid the actual foreclosure process (the public listing, the foreclosed sign on the lawn, etc.). The home owner signs the deed over to the lender, and the debt on the home is forgiven. Short Sale: Short sales are similar to deeds in lieu, but not quite the same. A short sale means a home owner gets the lender to approve the sale of the home for less than what they owe on the mortgage. You'll still owe the remainder, but the bulk of the debt is gone. Chapter 7: Declaring Chapter 7 bankruptcy means selling everything you own in order to pay creditors, and that includes your house. It's a legal process, and once you have been liquidated your creditors can no longer pursue you. Chapter 13: This is the other form of bankruptcy. Instead of selling everything, a plan is reached to forestall collection of debts. With Chapter 13, you get to keep your home.

The consequence of all of these measures, and of foreclosure as well, is that in all of them there is going to be some damage done to your credit record. On the positive side, this damage can and will be repaired over time, and keeping your house and paying it off is a big part of that.

Finally, of course, is the best option to foreclosure of all, and that is actually selling your home. Many people are frustrated in today's market at the time it takes to find a buyer, and at how few offers come in. However, there are alternatives to traditional real estate which allow sellers some flexibility when selling their homes, flexibility which can save thousands of dollars.