When you fall behind with your mortgage, the lender can file a foreclosure for the purpose of selling your home and paying the proceeds towards what you owe them. If you can afford to make your mortgage payments and pay the missed payments over 5 years, you can file a chapter 13 bankruptcy to save your home. If you cannot afford to make those payments, you can apply for a mortgage modification in an effort to lower your monthly payment and catch up. That can be done as part of a chapter 13 bankruptcy or independently, depending on your circumstances. If you can no longer afford your home or desire not to retain it, you can sell it, even if foreclosure was already filed. However, if what you can sell it for would not cover the balance, you can attempt to do a short sale. That is where the mortgage company agrees to allow the sale even though it is not selling for enough to cover the whole mortgage. An alternative option to short sale, especially if you have not been able to sell your house is to offer a deed-in-lieu of foreclosure. In effect, you are offering to give the property to the mortgage company and save them the time and cost involved in completing a foreclosure. Which option makes the most sense when you are behind on your mortgage depends on your circumstances. Securing experienced legal advice would be an important step in determining your best option.
