Debt is always a stressful situation. But when foreclosure is looming, it takes your stress to a whole new level!

When you’re unable to make your mortgage payments, the threat of losing your house becomes very real. With foreclosure stats increasing in nearly half of U.S. markets, it’s a dreaded reality many Americans are facing.

But how can you go about avoiding foreclosure? Are there ways that you can save your home?

Let’s look at 7 smart tips you can use to avoid foreclosure on your home.

1. Call Your Lender as Soon as You Can

As soon as you see trouble on the horizon, call your lender. This is important for a couple reasons.

First, your lender doesn’t want to foreclose on your house any more than you want them to. They have options to help you out of your situation and stop foreclosure altogether. And the sooner you are able to head off the problem, the better.

Second, your credit may still be in good standing. And if so, you want to take advantage of that because you will have more options out of the situation.

There are new programs designed for preventing foreclosure to those with good credit. For example, your lender may suspend foreclosure preceding for 30 days if you’re a qualified borrower.

So, don’t delay in asking for help.

2. Open All Your Mail from the Lender

Many people like to ignore the problem by ignoring mail that comes from their bank or lender. They think if they don’t see the problem, they don’t have to deal with it.

But nothing could be further from the truth.

Ignorance may be bliss, but it’s not going to help you keep your house. What will help is facing the problem head-on and developing a plan.

Open your mail. Read what the lender has to say. Many times the first few pieces of mail will offer programs and offers that will help.

Later pieces of mail may have information on legal actions that will be taking place. Using the excuse of “I didn’t see that notice” will not fly during a court hearing.

Open your mail and face the issue head-on. You won’t regret it down the road.

3. Find a Housing Counselor

When things get scary, all your options and the fine-print can seem to go over your head. But you don’t have to go it alone.

Find a HUD (U.S. Department of Housing and Urban Development) housing counselor. They provide free or low-cost help for those in your very situation.

The counselor can go over the laws and your options. Help you re-organize your finances. And represent you when it’s time to negotiate with your lender.

It will be peace of mind knowing someone is in your corner during a stressful situation.

4. Tighten Your Budget

Now is the perfect time to start prioritizing your spending. Any bit of fat you can cut from your budget will be in your favor when it comes time to negotiate with the lender.

Look and see where you can cut costs. Can you live without cable TV for a while? Do you really use that gym membership?

Any little bit that can go toward your mortgage payment will help.

Also look at assets you may have. Do you have a second car you can sell? Expensive jewelry or an insurance policy you can get cash for?

Or it may be time to look for a second job.

By showing the lender that you are willing to make sacrifices and do everything you can to save your home, they may be more willing to work with you.

Read more here for other options that may be able to help.

5. Know Your Mortgage Rights

You may have read over your mortgage papers when you first became a homeowner. But if that was years ago, do you remember any of it now?

Chances are, you don’t. So it’s time to refresh your memory.

Take your mortgage papers out and re-read the fine print. Find out what happens when you don’t make your house payment. And familiarize yourself with what your lender’s specific process is.

Then find out what the time frames and foreclosure laws are in your state. Each state is different, so check out the specific regulations in your area on the State Government Housing Office website.

6. Watch out for Added Fees and Scams

There are places waiting for and preying on those who find themselves in a foreclosure nightmare. And though they claim they want to help, they’re actually out to get your hard-earned money.

Many foreclosure prevention companies are legit businesses. Yet, they are offering foreclosure counseling and help at a hefty fee. This is the same kind of help you can get for free or much cheaper from a HUD housing counselor.

And then there are the foreclosure recovery scams. They claim they can immediately stop a foreclosure by getting you to sign a document which lets them act on your behalf. But what you’re really signing is your house title over to their control!

What that means is, your house is now theirs. And you could become a renter in your own home!

Never sign a document you don’t understand. And only trust advice from a HUD housing counselor, a trusted real estate agent, or an attorney.

7. Don’t Think Bankruptcy Is the Easy Way out

Bankruptcy is no joke, though many people think it’s an easy way out of a difficult situation. What they may not realize is, not only does bankruptcy destroy their credit rating for a long time, it may not get them out of foreclosure trouble as they hope.

While it’s true that bankruptcy, in some cases, can slow or stop a foreclosure, it doesn’t always. You may not know that bankruptcy judges are not allowed to restructure mortgage debt covering a primary house.

A Chapter 13 bankruptcy filing may place a hold on the foreclosure temporarily, but the borrower will have to continue making mortgage payments going forward to sustain the Chapter 13 bankruptcy.

It’s always best to contact a bankruptcy lawyer before you decide to go this route.

Avoiding Foreclosure is Possible with Some Work and Determination

Nobody wants to lose their home. But avoiding foreclosure is not impossible. Using these tips can get you back on the road to happy home-ownership with a bit of work and determination.

And when you’re out of the foreclosure shadow, check out these tips for how to increase your home’s curb appeal on a budget.