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How to deal with foreclosure

Gerri Willis answers readers' e-mails about foreclosure, home loans and bankruptcy.

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By Gerri Willis, CNN

NEW YORK (CNNMoney.com) -- Question 1:

My mother has a mortgage, and her house is now in foreclosure. She has desperately been trying to save our home. But the bank has failed to call back or provide her with any options as to what can be done to save her home and credit. Please help. - Leonard, New Jersey

It's such a sad situation that your mom faces Leonard. First, make sure she records and takes note of every time she calls the lender. Regulators have been trying to get lenders to work with struggling homeowners. So, you'll want to have proof that the bank is being unresponsive.

Your next step is to talk to a housing counselor. Here is a number for you: the Department of Housing and Urban Development at (800) 569-4287. There are housing counselors that can tell you what your options are.

Question 2:

I cosigned a loan for my sister to get a mobile home. I found out some years later that she missed several payments. She hasn't missed any payments recently but she does live on the edge by making the payments after the due date. Should my husband and I get a loan to pay it off and have her make the payments to us? - Frustrated in Virginia

When you co-sign on a loan you are essentially equally liable for the payments, and any missed payments according to John Ulzheimer of Credit.com. That means that your credit will suffer each time your sister misses a payment.

It would be in your best interest if your sister re-financed the loan into only her name. This way if she misses payments, it only damages her credit.

"Don't take out a loan and become her lender," says Ulzheimer. It's not a position you or your husband want to be in. There are too many traps - both emotional and financial - that you'll want to avoid.

Question 3:

To what extent do apartments and landlords consider someone's credit when apply for residence? - Michael, Virginia

When you apply for an apartment or to rent a home you will probably be asked to submit for a credit review prior to the landlord before you can rent. This is very common.

Keep in mind the law is generally on the tenant's side. Landlords and property management companies will definitely take your credit reports and your credit scores very seriously according to Ulzheimer.

Bottom line here: If you have terrible credit you may have to pony up some more cash to live there, or you may not be able to live there at all.

Question 4:

I've lost my job that paid well. I'm starting a new one that will pay less, but my bills will stay the same. I'm not sure I can afford my home. Is bankruptcy an option? - Jeff, Ohio

First off, sorry about the job loss. But there are other options you should explore before filing for bankruptcy according to Ulzheimer. A bankruptcy is a huge black mark on your credit report that can last for ten years. Bankruptcy may not always be the worst option but it should generally be your LAST option.

Here are some other options:

1: Foreclosure avoidance counseling. You can do this through a reputable consumer credit counseling agency. Go to NFCC.org to find a local office.

2: You may also look into debt management plans. This isn't for your mortgage loan, but it is for your credit cards. If you can reduce the amount you pay on your credit card bills then perhaps you can save the home.

3: And the hardest one of all for most of us: aggressive self budgeting - take a long hard look at what you spend each month. You'll probably identify areas where you can cut back.

All of these options are MUCH better than bankruptcy, and will save your credit scores. To top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
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