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Colorado homeowners finding ways to avoid foreclosure

When Colorado residents are facing financial challenges, sometimes it helps to talk things out with other people. This includes discussing the challenges with family and friends, as well as meeting with professionals who can help advise the person as to the best route to help solve those challenges.

In Colorado, nearly 19,000 homeowners have taken advantage of free foreclosure prevention counseling since 2008. This service has been offered through the National Foreclosure Mitigation Counseling program, which was established by Congress. Homeowners who have had trouble paying their mortgages obtained the free counseling and, according to some, three out of four who met with a counselor avoided foreclosure. Some may have received a mortgage modification, or proceeded to do a short sale on the home.

While resources like the above are helpful, not all homeowners are able to avoid foreclosure through the program. Some may not be able to obtain a modification, while others may be too far in debt in order for there to be other options. Instead, other measures may be advisable, including personal bankruptcy.

By filing for bankruptcy, individuals can stop foreclosure in its tracks by obtaining a stay of all foreclosure proceedings. The temporary stay will delay the foreclosure and stop all other collection activities against the person. The only way these collectors could then proceed is if they obtained a lift of the stay from a court. Accordingly, individuals can essentially live free in their home during this time and save the money they earn during this period. Ultimately, the delay may enable the person to save enough money to become current on his or her mortgage or negotiate with the lender.

Source: Denver Business Journal, "Study: 19,000 Coloradans helped by foreclosure prevention counseling," Heather Draper, Nov. 1, 2013

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