Avoid Foreclosure: 7 steps to save your home.

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Foreclosure, bankruptcy, unemployment are problems that seem so large as to become apparently insurmountable for many of its victims. That of course is one of the worst aspects of these crisis, they take away hope and energy out of people leaving them as shells of the people they used to be.

The situation is difficult and there are no easy fixes no matter what sleazy debt relief companies tell you however there are steps you can take to improve your situations. These steps are not magical and they will not guarantee your financial safety, they should however be part of your plan to avoid foreclosure or bankruptcy when in financially dire straits.

Step 1. Talk to your lender.
Lenders need to hear from their borrowers to have a clear understanding of their position. Imagine if you lent some money to two friends. One of them explains he has lost his job and cannot pay you as fast as he had hoped but presents to you a revised schedule with smaller but regular payments. The other friend has also lost his job but decides to ignore you and will not even explain his situation to you. Who would you be more inclined to give a break or treat kindly? Yep, banks feel the same way.

Step 2. Contact approved housing counselors.
There are plenty of debt relief companies willing to take your money to “help” you refinance or modify your mortgage. Some of them can help others are frauds. It pays to contact legitimate counselors throught the Department of Housing and Urban Development to make sure you are dealt with fairly. These counselors can help you for free and offer unbiased advice.

Step 3. Don’t pay for services you haven’t received and always sign a contract.It is against the law for debt relief companies to receive payment before they sign a contract explaining the services they will provide and before they actually carry out those services. Don’t be duped by companies that promise to reduce your loan and ask for payment before they do the work.

Step 4. Do not transfer your home to a debt relief company or “rescuer”.
A popular scam the Treasury and HUD departments are warning against is being carried out by fraudulent debt relief companies. They will tell you, you need to transfer ownership of your property to someone with a better credit rating so he can refinance your home and you can later on repay it. Obviously this is a scam to steal your home and rape it of any equity it might still have.

Step 5. Only pay your mortgage payments to your lender. Some scam consultants offer to take over the details of paying your mortgage as part of their debt settlement services. There have been many reports of debt relief companies pocketing the payments without making payments.