Released July 15, 2009
URBANA, Ill. - Does foreclosure forever brand you as an irresponsible person, someone who bought a home that was out of their league and deserves to face the consequences?
"There are many reasons people face foreclosure that don't reflect on the character of the homeowner at all. As the unemployment rate goes up in an area, it's safe to assume that foreclosure numbers will rise as well," said a University of Illinois Extension consumer and family economics specialist.
"Sometimes a life-changing event places homeowners in a situation over which they have little control," said Susan Taylor.
The National Association of Foreclosure Prevention Professionals lists these common reasons for foreclosure:
- Divorce. Many divorce scenarios can lead to home foreclosure. The partner who keeps the house will take over the monthly payments, but divorce is costly and can contribute to a person's inability to meet financial obligations. Poor communication during a divorce can also lead to unintended neglect and defaulted payments as well.
- Medical reasons. Unexpected illnesses lead to a surplus of uninvited bills. Many people can't afford these expenses or don't have insurance coverage to save them. Just as no one expects to pay thousands of dollars in medical bills, no one expects to face home foreclosure.
Saving money from each paycheck to cover potential medical expenses is the ideal backup plan, but many Americans live paycheck to paycheck, barely making their home loan payment. When a medical emergency occurs in a family, the monthly mortgage payment is put on the back burner. Illnesses can cause stress and disability, and both can affect a family's ability to make mortgage payments.
- Job loss. A frequent cause of home foreclosure, job loss means that mortgage holders may not be able to meet their monthly obligations. We have all been advised to put money away for a rainy day, but the enormity of paying a home loan, credit card bills, utility bills, and other expenses without a regular paycheck means that many people default on their mortgages, go into debt, and often face foreclosure.
- Death. This is the single most damaging event for a person or a family. If the family's sole provider has died, it is very likely that the rest of the family will lose their home in foreclosure. The remaining spouse may be unable to work or find a job that will meet the family's obligations. Sadly that person is often in a situation that threatens to spiral out of control. That's when a qualified housing counselor specializing in foreclosure can step in and help that person get control again.
"It's important for people to understand that unexpected events happen in life and few people are totally prepared to handle them. When a family has done everything they can to avoid foreclosure, it's unfortunate if other people stigmatize them as well," Taylor said.
For more information on getting through stressful times, including which bill to pay first, how to talk to your creditors, how to prevent foreclosure, how to save food dollars, how to talk to your children about your financial situation, and more, visit U of I Extension's "Getting Through Tough Financial Times" website at http://www.ToughTimes.illinois.edu.
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http://www.aces.uiuc.edu/news/stories/news4841.html
Source: Susan Taylor, (708) 720-7520, setaylor@illinois.edu
Writer: Phyllis Picklesimer, (217) 244-2827, p-pickle@uiuc.edu
