San Diego, CA. "Possibly the most serious credit problem any homeowner can face is the potential loss of a home through foreclosure. Typically, this process starts once the payments are delinquent by three months. Eventually, if some kind of resolution between the homeowner and the mortgage lender isn't agreed upon, the lender can legally take the home from the owner to sell and recoup their losses," says the nonprofit Institute of Consumer Financial Education (ICFE), a San Diego based nonprofit group dedicated to helping people improve their spending, increase their savings and using credit more wisely.

"If you fall even one month behind on your mortgage payment, it's time for swift action because the consequences can be so severe. First, you have to ask yourself if there's a legitimate reason for your inability to make the payment. Did you lose your job or were you out of work for a while? Have you recently gone through a divorce? Or are there problems because spending is out of control?" asks the ICFE.

If you earn enough money, but can't seem to pay the bills, try to determine why. Is there just not enough time or you are not well organized? If you have enough money, but are often late with payments, you may need counseling help from an accredited, nonprofit Consumer Credit Counseling Services (CCCS) agency. They can work with you on your money management skills and help get you back on track with your mortgage and other debts.

In either case, the best way to deal with foreclosure is to communicate openly and honestly with the lender. Contact them as soon as you sense you're in trouble, even if you're only one month behind. And if you're experiencing some form of financial hardship, let them know. It's in the best interest of the lenders to keep you in your house, so they'll probably accommodate you as long as they believe you are serious about getting back on schedule.

If you're already in foreclosure you do have several options. The first one is to reinstate yourself by bringing the loan current, including all the late fees that may have accumulated. This means sending a large sum of money to cover all the missed payments and fees. If you have an investment, such as a 401k you can borrow against or cash out in an emergency, it may be worth it to save your home. Or maybe you have an extra car or a boat you could sell to raise the money. One option not recommended is getting deeper in debt to get caught up, unless you are absolutely sure you can pay the second debt off. Otherwise, you only prolong the agony because you're still overextended.

Another option is a forbearance, which means you resume your payments, with money added to your loan to cover missed payments and late fees over a specific period of time. The lender will probably also require a significant lump sum up front before agreeing to this type of arrangement.

A deferment is an arrangement wherein the lender agrees to suspend the payments for a specified period of time. It's fairly difficult to get the lender to agree to this, unless you can document that you will be receiving a large sum of money, such as a court settlement or quarterly bonus, in the near future.

Overall, there are a lot of factors that will dictate what your best decision is. If you want to resolve the debt in such a way that you vacate the property, several other options may open up for you, including an outright sale of your home. It won't necessarily save your home, however it may save your credit record. With so many options available, be sure to ask the lender or a qualified credit counselor for some more specific guidance.

If you need help reducing your debts, and or "Mending your Spending,” visit the ICFE's Web page at: http://www.icfe.info. The site includes helpful sections on increasing savings, using credit wisely, plus "How to set up and implement a spending-plan" (with a one page work sheet). To receive the same information by mail, please send $1 and a self-addressed, 60 cent stamped envelope to:

ICFE Money Helps
PO Box 34070
San Diego, CA 92163-4070.