Maybe you’re behind on your mortgage payments. Or maybe you’ve missed your last few car payments. If you’re facing trouble with any type of loan, it’s critical to be open and honest with your lender.
With so many types of loan modifications to consider, there’s a good chance you’ll find something that suits your situation and allows you to get back on track. Here are some options to discuss with your lender:
- Forbearance: This happens if your lender agrees to reduce or suspend payments for the time being, such as until a financial hardship, like unemployment or a serious illness, comes to an end.
- Loan extension: This allows you to tack on missed payments to the end of your loan and/or lower your payment through the implementation of a longer term.
- Reduced interest rate: If a high interest rate is making it difficult to pay your loan, your lender may reduce it temporarily or permanently.
- Repayment plan: Rather than foreclose on your home or repossess your vehicle (or other collateral), you work with your lender on a repayment plan that allows you to catch up.
Many people shy away from staying in touch with their lender when faced with financial difficulties. They decide to hide, hope that things get better and then catch up as their situation improves.
By discussing your loan modification options, you may find something that is mutually beneficial to you and your lender. If that doesn’t work, learn more about Chapter 7 and Chapter 13 bankruptcy, as both types are designed to help individuals facing severe financial difficulties.