Steps for Avoiding Foreclosure
Investment broker Marilyn Logan says there are easy steps to take to avoid foreclosure.
"When a foreclosure happens or when bills come in that you can't pay, the first thing you need to do is contact your lender. It's not that difficult. Just pick up the phone and call the lender and say, 'I've either lost my job, I'm sick, I got fired, or I'm having marital problems,' she advises.
"Timing is important," Dr. Phil points out.
1. Admit that You Need Help
"Admit that you don't know what you don't know," Marilyn says. "People haven't gone through this. This is unfamiliar territory. You're not a specialist, so you need to have help."
2. Contact Your Lender if Your Income Changes
Marilyn says the four major reasons people lose their homes are: someone gets sick, someone dies, someone loses a job or marital problems.
Lenders don't want your property, because if they have to take it back, they will take a monetary loss. They would rather work out a plan with you so you can keep it.
3. Don't Borrow from Your 401K
"Retirement money is for retirement. It is not to bail your situation out with reference to your home," Marilyn says. "You can always get another house. You can't get more retirement. It took you years to accumulate that money. Don't throw that money away in trying to bail yourself out of your home."
4. Sell, Sell, Sell
Sell any and all possessions in order to get more cash in hand. Most people have most of their money in their 401K or the equity in their home. "You need to keep your eye on those two things all the time," Marilyn says. If you get strapped for money, a good option may be selling your home, so you can recoup money, pay off your debt and start over.
Dr. Phil adds that difficult financial situations come down to more than brick and mortar. "There are so many people out there struggling to keep a specific house, and I think that's such a mistake," he says. "You have to have shelter, you have to keep a roof over your family's head, but it doesn't have to be some house that you're emotionally married to."
"I believe that couples need to realize that you don't need to have all of this space to actually raise a family," Marilyn says.
Sometimes people must live smaller in order to secure their finances.
5. Have Family Money Meetings
Sit down once a week with your spouse and have a money conversation. "If you can share your bed together, you need to be sharing your money," Marilyn says.
6. Open all Mail
"Don't avoid the issue, because it only gets worse," Marilyn says.
For more of Marilyn's advice, click here.