If you are dealing with a debt crisis, chances are you’ve fallen behind on some of your payments. Many times, households skip the mortgage payment one month because those funds can be used to stave off several other accounts. This tactic can quickly backfire, though, because once you start missing mortgage payments it can be very difficult to catch up.
Mortgage payments are typically larger than other debts, and paying several months of those payments at one time can be difficult. Homeowners can find themselves three or four months behind before they even know it, because life moves quickly and debt woes are rarely solved at the same pace. Typically, once you’ve missed three mortgage payments, you are in danger of foreclosure.
One thing you might be able to do is talk to your lender about a mortgage reinstatement — or, work with an attorney who can help you negotiate such an agreement. A mortgage reinstatement occurs when you agree to pay all of the missed payments, plus all fees, late charges and attorneys fees the lender might charge you. While this route does let you keep your home, it can be expensive. You might have to pay three to six months of mortgage payments on top of all the fees, which can be several thousand dollars themselves.
While reinstatement is often an option, if you are having trouble making your mortgage payment, you might have a hard time coming up with such a lump sum. Working with a lawyer ahead of the need to reinstate to discuss bankruptcy might be a better option. Some bankruptcy exemptions could let you keep your house if you qualify to file for Chapter 13 bankruptcy.
Source: Geeks on Finance, “How to Negotiate Loan Reinstatement,” accessed April 14, 2016