Debt Services Help! I Can't Pay My Mortgage!

If you're seeking debt services, you're probably close to falling behind on your mortgage payments as well

. What happens when you can't pay your mortgage? Let's start with your first mortgage. When you start to fall behind on your mortgage payments, you'll have to figure out if you really want to keep your house. Once you're behind, it's very difficult to catch up as your mortgage payments are probably the highest payment you're making each month. When you fall behind, you take an immediate, pretty nasty smack to your credit score, and suddenly you'll start getting a bunch of letters about consolidation loans. Personally I don't thing consolidation loans are a great option and were just created by more greedy financial institutions to prey people like you and me who have issues with money.

Once you're a few months behind on your mortgage, you'll get a certified notice in the mail and probably a legal-sized letter taped to your front door for all your neighbors to see notifying you that your mortgage company is beginning proceedings to foreclose on your property. You don't need to attend the hearing at the court house that they mention in the notice. At this point, if you continue to not be able to pay, you can still live in the house until you get kicked out. You'll find out about a sale date (the date of the auction for your home), and if nobody buys it at auction, or if your second mortgage company buys it at auction, you may still be able to live at the home for a short time. It's best just to move if you can, but even if you can't you'll be removed from the home regardless, probably with all your neighbors watching. I don't mean to be a downer here, but you need to be prepared so you can make better decisions leading up to it. Keep applying for jobs; your bound to get something, and if you want to keep your house, ask your home mortgage company about a government re-fi - wait, this article is about what happens if you don't pay...

So what about your second mortgage? If your second is a home equity line of credit, you may run into some difficulties getting your company to forgive or settle the debt in order to short sale your property. A short sale is when you sell your home for less than what you owe on it. In a short sale situation, it's usually the second mortgage holder who gets the shortest end of the stick (but they were the greediest of them all during the re-fi boom anyhow, weren't they! When the Chase evaluator came to my house, six months after I paid $217,000 and only $6000 to upgrade my kitchen, he spent only about 6 minutes walking through the house and said, "Yep, this is an easy $245,000. I couldn't believe it was that easy!

But, watch out for the second mortgage company in these situations. I've often heard of sellers being hit with a $30,000 - $70,000 bill (more or less) from their second mortgage holder because they or their realtor didn't check the fine print in the sales agreement of the short sale. This debt then turns into unsecured debt as there is no longer a house to secure it. The folks who are surprised by this loophole often end up needing to file bankruptcy or deal with years of debt collector calls for this chunk of unpaid debt.

Here's the interesting part of second mortgages though: If you can only pay on your first, oftentimes your second won't start foreclosure proceedings ever because they won't see a dime after the sale anyways. It costs them money to foreclose, and they would have to wheel and deal with the first mortgage holder in order to stand a chance at getting any money out of the sale, so oftentimes it's not even worth it for the holder of the second mortgage to foreclose on the property. If you can't pay both mortgages, the best bet may be to pay the first and stop paying on the second until you're caught up. But get some advice from a professional first. And here's the real deal, if you're having trouble with your mortgage, you're probably having trouble with your credit card debt as well. Stop paying them first. Credit card debt is usually unsecured. What that means is that they can't take your house or put you in jail for not paying. Pay your house before your credit cards. For more information, go to www.settlementdebtservices.org/debtservices

by: Al Gibson

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