Facing Foreclosure? Here's What to Do

But that's bad advice because under current bankruptcy law, judges don't have the authority to modify mortgages, so you will still be stuck with payments you can't afford. Often, these "foreclosure rescue" schemers charge a big fee up front (hundreds or even thousands of dollars), then do nothing for you and disappear. It's called "Foreclosure Fraud."

In another version, the people at the company have you sign your house over to them and promise you can buy it back in a year. But the rent they charge you in the meantime is so high that you can't possibly afford it. Eventually, they evict you and take possession of your home.

One key way to guard against these crooks is simple: Don't do business with anybody who approaches YOU offering help. Fast-talking thieves look up lists of people facing foreclosure and target them. Instead, only do business with companies and counselors that YOU seek out. My term for this advice is, "Be the hunter, not the hunted."

Be Creative

If you are unable to persuade your lender to let you pay less, maybe there's a way for you to make more. Have you thought about renting out an extra room to a college student? Can your family make do with just one car? (If you want to go green, selling one vehicle and taking public transit is a big start.)

Perhaps the thought of working six days a week in your current job is nightmarish. But could you take on a second job that is so different from your first that it doesn't stress you out? A friend of mine is an HIV counselor during the week, but works at a home and garden store on Saturdays. For her, the retail work is light and easy and she brings in some extra income.

You should also take a hard look at whether you really belong in your house. Did you buy over your head because the no-questions-asked loans of the past decade made it possible for you?

Perhaps you would be less stressed out in more modest digs. If so, sometimes you can sell your home for less than you owe and your lender will agree to take the loss instead of foreclosing. Ultimately, that is less expensive for them. And families are often pleasantly surprised at how they reconnect with each other in closer quarters.

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