Ten steps to avoiding foreclosure
The best way to avoid foreclosure is to stay on top of your mortgage and loan repayments, but there are several other steps you can take to protect your home and credit rating.
1) Don't default on repayments - if you make your loan or mortgage repayments on time and in full, the bank will have no reason to start foreclosure proceedings.
2) Protect your credit rating - when it comes to big purchases like buying a home, your credit rating is the most valuable thing you own. Try to minimize borrowing and make prompt payments on all your bills.
3) Avoid debt - remember, credit is never free money. Try to live within your means and only use credit if you are sure that you can meet the repayments.
4) Stay on the right side of your lender - make payments on time and reply promptly to letters and phone calls. Lenders are more likely to be flexible with people who demonstrate a mature and responsible attitude to loans.
5) Save money for emergencies - set aside some money every week for an emergency fund and only dip into it if there is a real emergency.
6) Establish a home equity line of credit - when you purchase your home, arrange a home equity line of credit for use in an emergency.
7) Consider job-loss or mortgage life insurance - for an additional monthly premium, you can obtain cover that guarantees your mortgage payments if you lose your job or pass away unexpectedly.
8) Know your rights - read up on the rules and regulations governing credit and foreclosure. If you know your rights, you stand a much better chance of keeping your home if you do go into arrears.
9) Beware of scams - there are plenty of people out there waiting to make money from foreclosures and not all are legitimate. Be wary of buyers who offer to buy out your mortgage or private counselling firms who charge for things that you can do for free yourself.
10) Brush up on bankruptcy law - if your business fails, you may be able to file a Chapter 13 notice of bankruptcy, which can protect you from foreclosure.