If you're struggling financially, facing foreclosure, or owe more on your mortgage than your home is worth, you may consider forfeiting your property and walking away. This means you voluntarily sign over all your rights to the property to the mortgage lender. In some cases, this won’t negatively affect your credit score.

It’s very important that a qualified bankruptcy attorney help you through this process, because if this is done incorrectly, you may face consequences that could include legal judgments, tax penalties and outstanding debt payments.

If you're trying to avoid foreclosure, you should also explore these options:

Mortgage modification: The terms of the mortgage are changed to make it more affordable for the homeowner.

Short sale: The bank accepts a sale price that's less than the mortgage amount owed. This can be a long and stressful process for homeowners, but some people choose it as an option when they want to avoid foreclosure and are willing to forfeit the home.

Deed-in-lieu of foreclosure: This option can be used if you don’t qualify for a mortgage modification or a short sale. In this scenario, you submit a letter to the lender that explains why you can no longer afford your home. Once approved, you're free from your debt obligation and the lender owns the home. Sometimes this is called a “cash for keys” program because the bank pays the homeowner a certain amount of money to move out of the home on an approved date if the homeowner leaves the property in good condition.

File bankruptcy: If you want to avoid foreclosure and also want to keep your home, bankruptcy can usually help. Filing Chapter 13 bankruptcy will immediately put a stop to any harassing creditor phone calls and halt the foreclosure process. From there, your attorney and the courts help you set up a payment plan that's reasonable for your unique situation.

Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.