Though the United States is recovering economically, millions still face the ultimate American nightmare: foreclosure. Regardless of income level or neighborhood, foreclosures can happen anywhere and affect anyone. The process begins when a homeowner begins missing their mortgage or loan payments and their lenders make legal moves to repossess the property to recoup lost funds.
Some individuals decide to file for a Dallas bankruptcy to avoid foreclosure. However, being aware of the top 10 foreclosure pitfalls can help you avoid both situations altogether. Reasons people fall behind on their foreclosure payments include:
- Adjustable rate loans. Many homeowners are tempted by the low payments and interest rates, but are caught off guard once the cost accelerates alongside the interest. When they are buried under unbearable debt, they are faced between filing for a Dallas bankruptcy or foreclosure.
- Unemployment. In this shaky economic recovery, layoffs can come unexpectedly. Since most Americans don’t have enough in their savings accounts, sudden job loss can become a cause of foreclosure.
- Credit card debt. More than half of the population has credit card debt. When the debt is uncontrollable, some people are faced between missing their credit card payments or their mortgage payment. In the end, many escape a Dallas bankruptcy only to file for foreclosure.
- Medical expenses and illness. Medical reasons are the cause of 13 percent of foreclosures nationwide. Whether it’s the added stress of medical bills or the loss of a job due to sickness, illness plays a major role in both forecloses and the decision to file for a Dallas bankruptcy.
- Divorce. At the end of the relationship, the heightened emotional state and legal proceedings can make it easy to ignore financial issues. Suddenly, divorced individuals realize that payments have been missed and that neither party can shoulder the bills on their own.
- Multiple bills. There are other bills aside from credit card debt and home loan payments. Sometimes people are so concerned about their credit score and avoiding a Dallas bankruptcy that they mis-prioritize which bills get paid and ignore their mortgage.
- Sudden relocation. Whether you moved because of your job or because you wanted to, a sudden relocation might not give you enough time to sell your home. Eventually, paying two mortgages becomes unbearable, and the choice between a foreclosure and a Dallas bankruptcy must be made.