When You Can't Pay Your Debts FAQ

Questions:

• I feel completely overwhelmed by my debts and don't know where to begin. What should I do?
• I might have to miss a car payment. Should I let the lender repossess?
• How soon after I miss a house payment will the bank begin foreclosure proceedings?
• If foreclosure is looming, might I be better off just selling my house?
• My utility bill was huge because of a very cold winter. Do I have to pay it all at once?
• When can a creditor garnish my wages?

Answer:

How soon after I miss a house payment will the bank begin foreclosure proceedings?

This varies from state to state and lender to lender, but most lenders don't start foreclosure proceedings until you've missed four or five payments. Before taking back your house, many lenders would rather:

• rewrite the loan
• suspend principal payments for a while (that is, you pay interest only)
• reduce your payments, or
• let you miss a few payments and spread them out over time.

Be sure to explore all of your options if you are facing foreclosure. To learn about ways to prevent foreclosure, see Nolo's article How to Stop Foreclosure.

There are several new federal programs designed to assist people in foreclosure. Some allow people to refinance and others allow homeowners to modify and existing loan. To learn more about these programs, see Nolo's articles Mortgage Modification and Refinancing Under the Homeowner Affordability and Stability Plan and Mortgage Refinancing to Avoid Foreclosure: The HOPE for Homeowners Act.