Life is not a bed of roses the reason why people experience challenges every now and then. The worst challenge anyone could face is losing his job and not being able to support himself and his family.
One’s hours at work may be reduced or one’s job may be terminated without you expecting it. This leaves you feeling helpless particularly if you don’t have any back up plan and you’re still paying your house.
What can you do then? Is there any way that your lender can help you with this issue? Here are several options you can follow to help you with your financial situation.
Inform Your Lender
Once you know that your work hours have been cut or you’ll be terminated soon, you need to contact your lender. Do not hesitate to do this because lending companies are aware of such problem and they are open to negotiations when it comes to a loan modification.
A lender can actually lower your monthly mortgage payment and the interest rate of your loan. It can also extend the terms of payment and in worse situation, may forgive a portion of your principal balance.
Keep in mind, however, that you must show proof of your financial hardship. Some documents you can provide are your bank account statements that show very minimal available funds and payslips showing your lower monthly salary. Medical bills that show the amount you owe because of a recent injury such as due to a car accident or illness are also important, according to car accident attorney, Daniel Gibalevich.
Find More Work
If you think you can accommodate more work, go ahead and find a part-time work. It can be stressful, though, but it would give you more stress if you lost your home to foreclosure. Having an additional job would be very helpful in providing you more income to pay for your monthly mortgage. Once you get hired for that part-time job, make sure to hold on to it until you overcome your financial crisis.
Declare Chapter 13 Bankruptcy
If you have exerted more effort and you think they’re not enough, your last resort would be to file for a Chapter 13 bankruptcy protection.
Do remember, though, that this has downsides such as a negative effect on your credit score. This option can actually bring down your credit score by more than 100 points and it will stay in your record for seven years. For this reason, you may have greater difficulty in qualifying for a new mortgage loan or any other form of credit.
In a Chapter 13 bankruptcy, it is the judge who comes up with a payment plan that allows a borrower to pay back his creditor at a rate and term you can afford. The other An advantage here is that you get to keep your house.
Another option is to file for Chapter bankruptcy which will permanently eliminate a portion or all of your debts. The downside here is that it will stay in your credit report for 10 long years. Other disadvantages are you may have to sell your house and other assets as part of your bankruptcy agreement.