Are there ways to avoid having a lender foreclose on your home? Certainly, but just the same as at an antique auction, everything depends on your reaction time. The first “Going” sound you should hear (and this is the one so many people refuse to acknowledge), means things are sliding rapidly out of control in your financial life. You keep hoping for a “fix” – perhaps a job offer, an insurance claim payment, a loan from a relative, a winning lottery ticket. Meanwhile, with each passing day, you put off taking action to keep yourself and your family financially afloat.

The second “Going” sound is an actual foreclosure notice. Now some of your options are gone, but, if you respond quickly, there are still choices remaining to save the home. “Gone!” means the sheriff’s sale has taken place, and essentially your options are few to none.

I’ve spent almost twenty-five years urging folks whose circumstances have taken a dramatic downward turn to get professional help before the “auctioneer” sounds the three-count. As an Indiana consumer bankruptcy specialist, I’ve learned over the years that, the earlier in the game I can help clients negotiate with their home lenders, the more flexible and positive a response they are likely to receive from those lenders.

There are many variations on settlements that have been negotiated between homeowners and their creditors, but most fall into four general categories. The first two types keep the homeowner in the home. The first is getting the lender to modify the terms of the mortgage by either reducing the interest rate or lengthening the payment terms. The second is a repayment plan, under which the homeowner “catches up” on the arrears by making a somewhat larger payment each month. In some cases, the catch-up can be moved to the end of the note’s term.

The second two types involve the homeowners losing the home, but they get out from under the debt. The first strategy is called “deed in lieu of foreclosure”, in which the debtor gives the house back to the lender in exchange for total forgiveness of the mortgage (even if the home is worth less than the amount owed). The second is a “short sale”, in which the homeowner sells the home to a third party and the creditor accepts this price as full payment.

I’ve worked with every possible variation of these four strategies, and there is no one-size-fits-all. It depends on the situation. The main thing is not to wait until the countdown begins, because what might be “gone!” are valuable options and choices.