Debt Reduction Services

The Debt Reduction Law Center provides you with several choices that may significantly help you avoid foreclosure and save your home, including the following:

Forbearance Agreement

To avoid foreclosure, a lender may agree to a deferral of the borrower’s missed payments, late fees, and penalties toward the end of the loan. By entering a forbearance agreement, the lender delays his right to foreclose on the homeowner’s property provided that the homeowner is able to catch up on payments. This is highly ideal for borrowers in temporary financial distress.


In many states, redemption is a statutory right that allows a homeowner to repurchase his property, even after foreclosure, after full payment of the outstanding debt and penalties has been made. While it is a very attractive option, depending on the terms of the loan and the severity of the borrower’s financial standing, this may not be feasible for many homeowners.

Repayment Plans

One of the more common ways of settling a loan default is a repayment plan. This allows the homeowner to repay a portion of his delinquencies every month along with his standard monthly dues. The following are other related legal avenues that may enable the borrower to settle their debt without foreclosure and with minimal damage to their credit score:

Short Sale Payoff Settlement
A short payoff sale requires a borrower in a desperate financial situation to sell his property for less than the total outstanding loan balance. We handle all communications and negotiations with lenders to increase our clients’ chances at getting their short sale approved by their lender. Our team will attempt to achieve push out sale dates as necessary and negotiate closing payoffs of accepted short sales.

Deed in lieu of Foreclosure
In this agreement, the borrower agrees to return the property to the lender to secure a release from the defaulted loan. The lender then agrees to not foreclose on the property. As part of our services, we would review such an agreement to ensure that it leaves you with no further liability to the lender, for example, for any shortfall the lender may suffer when the property is finally sold.


While bankruptcy is a homeowner’s ultimate alternative to stay in their home longer, it may or may not save their property. There are two basic personal bankruptcies available: Chapter 7 and Chapter 13.

A primary advantage of a Chapter 7 is that it allows you to discard credit card debts, unsecured debts and loans, and medical bills. It requires you to surrender your non-exempt assets to a bankruptcy trustee who then liquidates it to pay off your creditors. Under the exemptions allowed by federal and/or state law, you might be allowed to retain certain personal properties. While these properties differ from state to state, the law will generally allow you to keep a car, your home, clothing, furniture, household appliances, and items related to your livelihood.

On the other hand, Chapter 13 is advantageous for individuals who are behind on taxes, mortgage payments, or a car loan in that it protects non-exempt property. A chapter 13 bankruptcy requires you to pay a portion of your income to a trustee established by the Federal Bankruptcy Court for disbursement to creditors. A repayment plan is then established to follow.

Chapter 13 will be established by the court or trustee for three to five years. The monthly payment period allows you to make one simple payment according to the budget established by the court per you annual income – this allows you to reduce your debt at the same time. The court will also allot a significant amount of your monthly income for living expenses and necessities.

Unsecured debts that exceed $250,000 may qualify for a repayment plan under Chapter 11, which is also known as corporate bankruptcy. Chapter 11 bankruptcies may be a bit more complicated and are designed to protect those consumers with more assets and businesses at stake.

Qualifications for filing bankruptcy differ from state to state. Find out more on our bankruptcy qualifications page.