Bankruptcy / Economy / Filing Bankruptcy / Foreclosures / Loans / Mortgages / Managing Your Finances / Unemployment - Job Loss

Being Unemployed Doesn’t Mean Foreclosure Is Inevitable

The foreclosure crisis, once mostly restricted to the lower and working classes has now descended upon even high income earners and those in the middle-class.  The high unemployment rate and reluctance of mortgage companies to provide flexible mortgage modifications for homeowners facing foreclosure has increased the number of foreclosures all economic class are facing.  But how does an unemployed homeowner fight foreclosure?

  1. Fighting foreclosure while unemployed begins before you receive the pink slip.  One of the biggest mistakes that homeowners and even renters make is that they do not have enough cash on hand just in case of an emergency.  Even with unemployment insurance benefits, a job loss can make it nearly impossible to pay your existing debts let alone maintain the lifestyle you have become accustomed to. Financial experts suggest that homeowners have six months to a year worth of cash savings so that if they become unemployed they can use that money to survive while they work to secure another job.
  2. Do not wait until the absolute last moment to explore your bankruptcy options.  Even if you do not plan to file bankruptcy immediately after your job loss, at least talk to a bankruptcy attorney about how you can use bankruptcy to save your home from foreclosure. One of the unfortunate realities of unemployed individuals looking for work, is that even when they find another job, it is often paying significantly less than what they are use to.  This reduction in income often forces the debtor into foreclosure.  But fortunately in bankruptcy, the debtor may be able to discharge much of the unsecured debt and free up money so they can save their home from foreclosure.
  3. Communicate with your mortgage lender.  Some lenders may be willing to give your more time to find a job before they foreclose on your home. Some mortgage lenders may be willing to offer reduced or deferred mortgage payments for about 3 months. Even if that is not enough time to get completely on your feet, it does buy you some time to explore your other foreclosure prevention options.