Don't lo­se your ho­me in a fi­nan­ci­al cri­sis

George Herald - Auto Dealer - - News -

W­hen u­nem­ploy­ment, di­vor­ce, il­l­ness or de­ath stri­kes your fa­mi­ly, you may well ex­pe­rien­ce fi­nan­ci­al dif­fi­cul­ties that cau­se you to fall be­hind on your monthly bond re­pay­ments.

But if t­his is your si­tu­a­ti­on, you shouldn’t pa­nic, be­cau­se the­re is much you can do to a­void lo­sing your ho­me, says S­haun Ra­de­mey­er, CEO of Bet­terBond, SA’s big­ge­st bond o­ri­gi­na­tor. “The first thing you need to do, is to be pro-acti­ve and con­tact your len­der as soon as pos­si­ble to let them know w­hat is hap­pe­ning. You should ne­ver let em­bar­ras­sment or pri­de stop you from doing t­his - and pre­fe­ra­bly be­fo­re you miss the first in­stal­ment - be­cau­se you are de­fi­ni­te­ly not the first or on­ly per­son to hit a fi­nan­ci­al rough pa­tch.

"The banks ha­ve he­ard it all be­fo­re, and most of them would much rat­her ma­ke so­me sort of plan to help you keep your ho­me than go through the pro­cess of get­ting a debt judg­ment a­gainst you and then pos­si­bly ha­ving to re­pos­sess the pro­per­ty. T­his is an ex­pen­si­ve op­ti­on for banks as well as bor­ro­wers.”

Ot­her op­ti­ons mig­ht in­clu­de: For­be­a­ran­ce

Your len­der may al­low you to re­du­ce or sus­pend pay­ments for a short pe­ri­od if you can pro­ve that you are ex­pecting an in­su­ran­ce pa­yout, for ex­am­ple, or a re­tren­chment packa­ge or di­vor­ce sett­le­ment that will e­na­ble you to ca­tch up w­hat you owe and put you back on your feet fi­nan­ci­al­ly.

Re­pay­ment plan

Your len­der may be pre­pa­red to let you ma­ke re­gu­lar pay­ments plus a por­ti­on of the out­stan­ding a­mount each month until you ca­tch up.

Re­ca­pi­ta­li­sa­ti­on

Your len­der mig­ht agree for you to on­ly pay the in­te­rest por­ti­on of your ho­me lo­an in­stal­ment each month until your fi­nan­ci­al si­tu­a­ti­on im­pro­ves. The ca­pi­tal por­ti­on will be ad­ded back to your lo­an, which will thus ta­ke lon­ger to pay off.

Re­struc­tu­ring

By ex­ten­ding your lo­an re­pay­ment pe­ri­od from 20 y­e­ars to 25 or 30 y­e­ars, for ex­am­ple, your len­der could help you to lo­wer the mi­ni­mum a­mount you need to pay each month and gi­ve you e­nough leeway to get through your fi­nan­ci­al cri­sis. Ho­we­ver, the la­ter you le­a­ve it to ad­dress the pro­blem, the less ac­com­mo­da­ting your bank is li­ke­ly to be, so you re­al­ly must not wait until you are so far in de­fault that you start get­ting de­mand let­ters - or until the sher­iff of the court ar­ri­ves to at­tach your ho­me. On the ot­her hand, if your len­der does con­tact you a­bout out­stan­ding pay­ments, you must re­spond, and as soon as pos­si­ble. The­re is still a chan­ce that you can work so­mething out at t­his sta­ge but if you don’t re­act, the len­der will go a­he­ad and ta­ke le­gal acti­on.

Any len­der that is trying to help you hold on to your ho­me will want to know that the si­tu­a­ti­on is on­ly li­ke­ly to be tem­po­ra­ry, and to see w­hat you are doing to recti­fy it. So the se­cond im­por­tant thing you need to do is ma­ke an ho­nest as­ses­sment of how much mo­ney is ac­tu­al­ly co­ming in and how much you owe on va­ri­ous ac­counts, then draw up a strict bud­get that e­li­mi­na­tes any un­ne­ces­sa­ry spen­ding.

Work out the mi­ni­mum you need to pay for ne­ces­si­ties such as food, u­ti­li­ties and trans­port to work. Any mo­ney you ha­ve left af­ter that should go to­ward your bond in­stal­ment and then any ot­her debts. If you are in ar­re­ars on ot­her ac­counts, or li­ke­ly to be, you should al­so con­tact tho­se cre­di­tors, ex­plain the si­tu­a­ti­on and see w­hat ar­ran­ge­ments you can ma­ke with them.

T­hi­rd­ly, says Ra­de­mey­er, you must re­sist any temp­ta­ti­on to get in­to any mo­re debt (by ta­king out a per­so­nal lo­an, for ex­am­ple, or paying off so­me debts with your cre­dit card). “T­his will just ma­ke t­hings wor­se and could al­so da­ma­ge your cre­dit re­cord.”

And las­t­ly, he ad­vi­ses that if the pro­blem is li­ke­ly to be much mo­re long-term than you i­ni­ti­al­ly thoug­ht, you should on­ce a­gain ta­ke acti­on your­self and im­me­di­a­te­ly start ma­king ar­ran­ge­ments to sell the pro­per­ty, pay off your ho­me lo­an and keep your cre­dit re­cord in­tact. All the banks ha­ve as­sis­ted-sa­le pro­gram­mes for bor­ro­wers who find them­sel­ves in t­his si­tu­a­ti­on, and will put you in tou­ch with re­pu­ta­ble e­sta­te a­gents who will ta­ke you through the pro­cess.

I­ma­ge: www.ro­por­ta­j­de­po­su.com

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