If you have fallen behind on your mortgage in Pennsylvania, you may still have several options to avoid foreclosure. Which option may be available to you depends on your financial circumstances and how far behind you are on your payments.
The important thing is to understand the potential options available and address the situation rather than ignoring mortgage notices or foreclosure papers.
Repayment Plan
If your financial hardship is temporary and your income has recovered, your mortgage servicer may allow you to enter into a repayment plan.
A repayment plan spreads your missed payments over several months while you continue making your regular monthly mortgage payments. This may provide a way to catch up after a temporary financial setback.
Loan Modification
Another potential option is a loan modification.
A loan modification permanently changes the terms of your mortgage to make your monthly payments more affordable. This could include extending the repayment period or adjusting the interest rate.
Mortgage Forbearance
If your financial hardship is expected to be short-term, you may also qualify for mortgage forbearance.
Forbearance temporarily reduces or pauses your mortgage payments. However, the missed amounts will still need to be repaid later.
Chapter 13 Bankruptcy
Bankruptcy may also provide relief in certain situations.
Filing for Chapter 13 bankruptcy can allow you to keep your home by repaying your past-due mortgage payments over a period of three to five years while continuing to make your regular mortgage payments.
Filing a Chapter 13 petition generally triggers an automatic stay that temporarily stops foreclosure proceedings while your bankruptcy case is pending, subject to applicable legal requirements.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy may eliminate many unsecured debts, such as credit card and medical debt. Eliminating those debts can potentially free up income to help you afford your mortgage.
However, Chapter 7 does not eliminate the mortgage itself, and you must typically remain current on your mortgage payments if you wish to keep your home.
What Should You Do If You Receive Foreclosure Papers?
If you receive foreclosure papers, it is important to respond promptly. Failing to do so can make it easier for the lender to obtain a judgment.
If you have fallen behind on your mortgage, contact your mortgage servicer as soon as possible to discuss available loss mitigation options. You should also gather documentation regarding your income, expenses, and financial hardship and avoid ignoring any notices or court documents you receive.
Speaking with a HUD-approved housing counselor or an attorney experienced in Pennsylvania foreclosure or bankruptcy law can also help you understand your rights and determine the best course of action based on your specific circumstances.