Managing Your Mortgage: Options When You Can’t Afford to Pay

MaryBeth Schroeder
Sep 30
4 min read

Owning a home is often seen as one of life’s greatest achievements. But when mortgage payments become unmanageable, the stress can quickly overshadow the dream. Whether due to job loss, medical bills, rising expenses, or other financial setbacks, falling behind on a mortgage can feel overwhelming. Fortunately, homeowners have several options to manage their mortgage debt and regain stability including bankruptcy, which can sometimes be a strategic tool to reset finances.

In this article, we’ll explore the practical solutions available if you find yourself struggling to keep up with your mortgage payments.

1. Open Communication With Your Lender

One of the first and most important steps is to contact your lender. Many homeowners avoid this step out of fear or embarrassment, but lenders are often willing to work with borrowers who are proactive.

Options your lender may offer include:

Forbearance: Temporarily pausing or reducing payments while you get back on your feet.
Repayment Plans: Spreading missed payments over a longer period to catch up gradually.
Loan Modification: Changing the terms of your loan such as lowering the interest rate, extending the term, or even reducing the principal to make payments more affordable.

By being honest about your financial hardship early, you can often avoid foreclosure and buy time to explore other solutions.

2. Refinancing Your Mortgage

If you still have a decent credit score and some equity in your home, refinancing might be an option. Refinancing replaces your existing mortgage with a new one, ideally with lower monthly payments or a fixed interest rate that stabilizes your costs.

However, refinancing can be difficult if you are already behind on payments or if your home’s value has declined. In such cases, you may want to consider government-backed programs like the FHA Streamline Refinance or the VA Interest Rate Reduction Refinance Loan (IRRRL), which are designed for struggling homeowners.

3. Government Assistance Programs

Federal and state programs exist to help homeowners avoid foreclosure. Examples include:

FHA-HAMP (Home Affordable Modification Program): Designed for FHA-insured loans, this program can reduce payments by extending loan terms or lowering interest rates.
State Housing Agencies: Many states have hardship programs that provide temporary financial assistance or grants to cover mortgage payments.

Checking for local programs can provide much-needed relief during difficult times.

4. Selling Your Home or a Short Sale

If keeping the home is no longer financially feasible, selling may be the best option. In some cases, a short sale, selling the home for less than the remaining balance on the mortgage may be possible with lender approval. While this option can impact your credit, it is generally less damaging than a foreclosure and allows you to move forward without lingering debt.

5. Deed in Lieu of Foreclosure

Another alternative is a deed in lieu of foreclosure, where you voluntarily transfer ownership of the home back to the lender. While it still impacts your credit, it can be less stressful than enduring the foreclosure process and may allow you to negotiate better terms, such as forgiveness of remaining debt or relocation assistance.

6. Considering Bankruptcy as a Solution

For some homeowners, bankruptcy may be the most effective way to regain control of their finances. While it may sound intimidating, bankruptcy can provide significant protections and opportunities:

Chapter 7 Bankruptcy: Often referred to as “liquidation bankruptcy,” Chapter 7 can discharge many unsecured debts (like credit cards and medical bills), which frees up money to help with mortgage payments. However, it does not guarantee that you will keep your home unless you can stay current on your mortgage.
Chapter 13 Bankruptcy: This option allows homeowners to restructure their debts and create a repayment plan over three to five years. Importantly, Chapter 13 can stop foreclosure proceedings and give you the chance to catch up on missed mortgage payments while keeping your home.

Bankruptcy is not the right choice for everyone, but it can be a lifeline if your mortgage struggles are part of a larger financial crisis. It provides legal protection from creditors, halts foreclosure, and offers a structured path to rebuild your financial future.

7. Seeking Professional Guidance

Every financial situation is unique, and the best solution depends on your income, debts, and long-term goals. Consulting with a bankruptcy attorney or financial advisor can help you evaluate your options. These professionals can provide tailored guidance, explain the pros and cons of each approach, and protect your rights during negotiations with lenders or in court.

Conclusion: Regaining Control of Your Mortgage

Falling behind on mortgage payments can feel like the end of the road, but it doesn’t have to be. From lender negotiations and refinancing to government programs and even bankruptcy, there are multiple paths to relief. The key is to take action early, explore all available solutions, and seek professional advice to protect your home and your financial future.

Take the Next Step

If you’re facing mortgage difficulties and wondering whether bankruptcy may be the right solution for you, the experienced team at The Law Office of MaryBeth Schroeder is here to help. Our attorneys can review your situation, explain your options, and guide you toward the path that makes the most sense for your future. Don’t wait until foreclosure feels inevitable, reach out today for the support and expertise you need.