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What to do if ...

By Colleen Mastony, Chicago Tribune, Source: MCT News Service

In this economic meltdown, you would have to be wildly rich or downright crazy not to be thinking about contingency plans. If you have, read on: We've compiled a "worst-case scenario" guide.

WHAT TO DO IF ... Your home goes into foreclosure

More than 2 million homeowners faced foreclosure last year, and that number could soar as high as 10 million, depending on the severity of the recession. If you're afraid of losing your home, help is available.

1. Go to http://www.hud.gov/foreclosure/ to find help. The U.S. Department of Housing and Urban Development provides a guide to avoiding foreclosure and surviving the process, including state and local foreclosure resources. You also can call (800) 569-4287 to find a housing counselor near you. The Federal Reserve offers help online at http://www.federalreserve.gov/consumerinfo/foreclosure.htm.

2. Before you talk with your loan servicer, prepare your records. Write out your income and expenses, and calculate the equity in your home.

3. Contact your loan servicer early. The longer you wait, the fewer options you will have. If you have fallen behind on payments, consider discussing reinstatement, a repayment plan, forbearance, loan modification, selling your home and personal bankruptcy.

4. Throughout the foreclosure prevention process: a. keep notes on your communications with the servicer, including the date and time, nature of the contact, name of the representative and outcome, b. follow up on verbal requests with a certified letter, c. meet deadlines, d. stay in your home. You may not qualify for assistance if you move out.

5. Avoid "rescue" scams. For a hefty fee, supposed "mortgage rescue consultants" promise to buy you time. These services may sound helpful, but they can be performed for free by HUD-certified counselors, the attorney general's office or legal aid.

WHAT TO DO IF ... Foreclosure hits you _ as a renter

In Chicago alone, 32 percent of 2008 residential foreclosure filings involved two-to-six-unit properties, buildings that were likely filled with renters. If you discover your building is in foreclosure, don't panic.

1. Foreclosure cases typically take at least 9 months, during which time tenants who are current with their rent can continue to live in the building.

2. To confirm that your building is in foreclosure, contact your local or county government. Many have Web sites (though the assessment office, clerk of courts or recorder of deeds) that allow you to look up the deed to the property and any pending cases.

3. Continue to pay the rent. Landlords are entitled to rent payments until the building is sold.

4. If the building needs repairs, send a letter to your landlord stating that you intend to withhold a portion of your rent if repairs are not made within 14 days of the landlord's receipt of the letter. For serious repair issues, get the landlord into court.

5. If you find a sheriff's notice warning of an imminent eviction, follow the posting's instructions and notify the sheriff that you live in the building. If anyone other than a sheriff's officer attempts to evict you, call 911. Have documentation ready to prove residency. If you are named in an eviction, you may be able to have the record sealed, thus protecting your credit.

WHAT TO DO IF ... Your utilities get shut off

Obviously, you should do everything you can to avoid having your utilities shut off. But if you do end up in the dark, don't despair.

1. Know your rights. Contact your state utility commission to find out more about state regulations regarding utilities. See a complete set of listings at http://www.consumeraction.gov/utility.shtml.

2. Check the nearest LIHEAP (Low Income Home Energy Assistance Program) office, which offers assistance to low-income residents. Find information about the program at http://www.acf.hhs.gov/programs/ocs/liheap/ and a list of state contacts at http://www.acf.hhs.gov/programs/ocs/liheap/grantees/states.html.

3. Don't make a bad situation worse by falling behind on your phone payments. Remember, phone bills are ripe for reduction, even by hundreds of dollars a year. Contact your phone provider about cheaper options, and explore other options, like Internet or cell-only usage.

4. Beware of health dangers such as opening a gas stove for heat or using space heaters that could spark fires. Check with your municipality to inquire about cooling or warming centers, or try to stay with a friend or family member.

5. Find additional help from the National Consumer Law Center at http://www.consumerlaw.org/initiatives/seniors_initiative/disconn.shtml. The site examines some measures that advocates for the elderly can take when an client is facing disconnection of utility service, but the tips are widely applicable.

WHAT TO DO IF ... You lose your job, your insurance

If your employer hands you a pink slip, here's what you should do:

1. Negotiate your termination package. Companies will sometimes extend company-provided health insurance or lengthen the period of severance payments.

2. Apply online for unemployment benefits with your state department (find contacts at http://www.servicelocator.org/OWSLinks.asp), or go to a local unemployment office (locations are listed in the phone book). Payments begin within four weeks and can continue _ with extensions _ for 59 weeks.

3. Try to get insurance through your spouse or through COBRA. If those options aren't available, check with your state department of health and family services to see if you qualify for assistance.

4. Check to see whether you qualify for food stamps, now called the Supplemental Nutrition Assistance Program. The USDA has extensive information about the program, as well as state contacts, at http://www.fns.usda.gov/fsp/.

5. Develop a financial plan. Prepare a budget and figure out how to reduce expenses.

6. Start your job search. Network with friends and former colleagues. Look online at Web sites specializing in your jobs in your field, or on larger sites like CareerBuilder.com or Monster.com.

7. Stay positive and remember that you're not alone.

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(c) 2009, Chicago Tribune.

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