Owning a home doesn’t protect you against losing your job, incurring unexpected repair or medical bills, or experiencing other forms of financial hardship. Missing a mortgage payment may seem quite devastating on top of your difficulties. However, the consequences aren’t always immediate, at least compared to not paying other bills. Having food on the table is more important. But if you’re in danger of missing a payment on your mortgage, here are some things to know.
- Being one month behind on your mortgage will not trigger a foreclosure.
- You will be charged a late fee (about 5% to 10% of your monthly payment).
- A mortgage comes with a grace period; it won’t be considered late until 10 to 15 days after the due date.
Missing a mortgage payment, however, can have a serious impact on your credit. One missed payment can drop your credit score from 60 to 110 points, but this can correct itself after a few months, if you get caught up on your payments. A “Late 30” note may be placed next to the loan on your credit report, which can be removed if you get the loan current. When your credit score drops significantly, it can affect anything from getting new credit cards to securing any kind of financing for purchases.
What If I Am Behind on Mortgage Payments?
If you are a month behind on a payment, you can expect the account to go to collections. You’ll probably receive a letter or phone call from your lender. Do not ignore this communication. With continued letters and calls, your lender will assume you don’t intend to repay them. On the other hand, informing them of your situation can help work out a deal to address the situation.
Communicating with Your Lender Is Important
It’s therefore very important to speak to your lender when you run into financial trouble. If you’re willing to work through the issue, the bank will likely work with you. The lender might delay reporting your missed payment to a credit agency or even charging late fees. In some cases, your lender may agree to lower payments for a period of time (forbearance) or options such as loan modification. Nonetheless, it helps if you have a good track record of paying on time and express concern about the problem escalating further.
You are considered in default on the loan if your behind by 90 days or more. Foreclosure actions can now begin. The lender can proceed with a process that ultimately results in you being evicted from your home. All is not lost when you are in default. Lenders are often willing to work out a plan to help you get current. Otherwise, your home will go into auction. When there are no options to avoid this scenario, filing for bankruptcy can protect you.
How a Bankruptcy Attorney Can Help
At OakTree Law, our Los Angeles bankruptcy attorney can assist you in understanding all available options, so you can decide on the best course of action. We can help you file for bankruptcy and avoid the risks associated with it. Our goal is to help clients get back on their financial feet. From avoiding the effects of large debt to weighing options such as loan modification, to taking steps to avoid foreclosure, our Los Angeles and Orange County bankruptcy attorney can work alongside you. To request a free consultation, contact us online or call 562-219-2979 today!