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How many payments must someone miss to risk foreclosure?

On Behalf of | Jul 10, 2024 | Bankruptcy

A primary residence is more than just a place to sleep and store property. It is a source of personal wealth and pride for many adults. Homeowners often prioritize maintaining their residences even during times of significant financial hardship.

Unfortunately, those dealing with significant financial hardship cannot always continue juggling their financial obligations. People may start falling behind on their mortgages, putting the home where they live at risk of foreclosure.

How many payments does someone have to miss before a lender can take legal action to foreclose on the property where they live?

People usually have to miss multiple payments

As a general rule, people usually need to miss at least four mortgage payments in a row for a lender to have the option of foreclosing on the property. There are some exceptions to that rule depending on the terms of the mortgage and other details.

For the most part, however, someone must fail to make payments four months in a row before a lender can initiate foreclosure proceedings. Unfortunately, many mortgage lenders may begin the process as soon as they legally can, meaning that someone who misses a second or third payment after missing one may need to start thinking carefully about their financial options.

Foreclosure can lead to life-altering financial setbacks including the loss of years of accrued equity and difficulty acquiring even a rental home in the future. Bankruptcy is often the last option people turn to when they are at risk of foreclosure.

How bankruptcy can help

Some people pursue Chapter 13 bankruptcy cases. They may have an opportunity to renegotiate the terms of their loan with their lender. Making small adjustments, like moving the missed payments to the end of the mortgage, could help someone avoid future defaults and bring their mortgage back into good standing.

The cessation of other collection activities in a Chapter 7 bankruptcy could help someone free up the capital necessary to make the missed payments and continue paying their mortgage on time every month. The discharge of other financial obligations can help people balance their household budget, making it easier for them to consistently pay their mortgages in full and on time after a discharge.

The automatic stay that the courts provide when someone files can also help delay foreclosure. That can give someone an opportunity to communicate with their mortgage lender or make financial moves that help them bring their mortgage back into good standing.

Learning the basics of the foreclosure process can help those who worry that their homes may be at risk. A timely personal bankruptcy filing could help someone preserve their most valuable assets from foreclosure and other debt collection efforts.