@Ape511 Wow - I am so sorry to hear this. It must be very stressful for you.
While you 'may' want to talk with an attorney about bankruptcy, and I am not necessarily recommending that, bankruptcy is the last option I recommend you consider. A Chapter 13 bankruptcy will stop a foreclosure and protect retirement money, but a Trustee will take over (meaning you lose control) and you and the trustee agree to a repayment schedule of 3 - 5 years in which everything must be paid in full. A Chapter 7 bankruptcy liquidates debts and state law determines the amount of personal property you get to keep. A bank can still force the sale of your home if there is significant equity to pay a percentage of debt. You will be subject to a means test to see if you even qualify. All sorts of stuff here and I am not a bankruptcy attorney.
Please be aware bankruptcy stays with you for life. Consider it a nuclear option.
If any future application you fill out has the question, "have you ever filed for bankruptcy?" you must check the yes box, otherwise it is fraud to say no. Notice the question is not prefaced with "...in the last X amount of years have you filed for bankruptcy?" Bankruptcy can affect your ability to maintain or get a certain job or hold a security clearance. These are severe unintended consequences. Bankruptcy generally costs a few thousand dollars. How will you pay your attorney?
You may be able to get a loan, but if your house is in foreclosure you are already a significant credit risk. Any loan you can get may be at extortionary interest rates, so you'd be digging yourself right back into hole. If you have a 401(k) plan you 'may' be able to tap it for money to pay, but that too is an extreme measure.
You say you your house may be going into foreclosure. What is the 'may?' Talk to your lender. Pick up the phone and have a conversation. Find out what you can do to not go into foreclosure. I know it may be very intimidating to talk to the lender, but you have to know exactly where you stand. It may not be a foregone conclusion. Don't assume so.
Some options are:
Forbearance agreement - the lender/noteholder agrees not to foreclose as long as you can bring your arrears up to date by X date. It is an agreed upon schedule, the lender must consider you a 'qualified' homeowner, and the repayment schedule will vary based on your loan type.
Sell your house if you will not sustain unreasonable loss.
Pay off the entire loan before auction.
Refinance if the lender allows! <--- strong option
Loan modification - modify the loan by changing the terms or payment by agreeing to pay a reduced amount for a short period of time, if the lender allows. You must be 90 days delinquent. You must document your hardship in writing or what was the change in your financial circumstances, provide proof of income, your ability to repay, and provide a detailed monthly budget or expense sheet. Also - you cannot have filed for bankruptcy !!!
Agree to a short sale - you and the lender agree to sell the property for less than what is owed. You must ask the lender first.
Surrender 'the deed in lieu of foreclosure' - this gives the property bank to the lender/noteholder in exchange for a release from the mortgage.
Finally - Chapter 13 bankruptcy. A court-appointed trustee overseas the repayment of debt through a budget plan.
I strongly encourage you to pick up the phone and talk with your lender. Have a pencil and pen ready to take notes. If you don't understand a term, ask them to clarify. Get specific dates requiring specific actions. Write down the person you speak with, and the date/time. I know this can be scary, but knowledge is power. Good luck!!
