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:

If foreclosure is looming, might I be better off just selling my house?

It's often better to sell the house than lose it to foreclosure. If you can sell the house and have enough leftover to pay your lender in full, seriously consider the offer. If the offer is for less than the amount you owe, your lender can block the sale. But many lenders will agree to a "short sale" -- the sale brings in less than what you owe the lender but the lender agrees to forego the rest. Some lenders require documentation of financial or medical hardship before agreeing to a short sale. To learn more about short sales, see Nolo's article Short Sales and Deeds in Lieu of Foreclosure.