Defaulting on mortgage payments may lead to defaulter’s property being seized and sold at a public auction to realize the debt in part or in full. This is termed foreclosure. Foreclosure can be excessively stressful for your mental and physical health.
According to a study published in PLoS One,
“Home foreclosure adversely affects health and mental health through channels operating at multiple levels: at the individual level, the stress of personally experiencing foreclosure was associated with worsened mental health and adverse health behaviors, which were in turn linked to poorer health status; at the community level, increasing degradation of the neighborhood environment had indirect, cross-level adverse effects on health and mental health.”
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The Relationship Between Financial Stress & Physical Health
Irrespective of who you are and why you owe money to others, having debt can affect your physical health. According to a study published in The Review of Income and Wealth,
“We find all debt measures to be strongly correlated with health satisfaction, mental health, and obesity.”
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Keep reading below to learn more about the impact of financial stress on physical and metal health!
How High Debt to Assets Ratio Leads to Poor Health
A vast majority of adults who have high debt to assets ratio are showing signs of poor health. This ratio shows to what extent assets are financed through equity.
A greater than one ratio indicates assets are funded through debt, and you can land in trouble if the creditor starts demanding payment.
Heart Disease and Stroke
Too much stress paves the way for high blood pressure which may cause heart disease and stroke eventually. Young people of nowadays lead stressful lives and many of them suffer from high blood pressure.
Debt Leads to Anxiety
Those in obligation have shown higher levels of stress compared to other persons. High levels of stress are associated with high blood pressure.
According to a study published in the Journal of Financial Counseling and Planning,
“Results from two hierarchical regressions indicated that financial satisfaction, student loans, and gender are associated with financial anxiety.”
Read More: How to Deal with Anxiety
Development of Migraines and Headaches
People with obligations are prone to migraines, headaches on a regular basis than individuals with lower levels of liability stress. As stated by a study published in The Journal of Head and Face Pain,
“Although recurrent tension headache sufferers (N=117) and matched headache‐free controls (N=174) reported similar numbers and types of stressful life events, headache sufferers reported a greater number of chronic everyday stresses or daily hassles than did controls.”
Consistently dealing with stress from debt can have a direct effect on headache frequency.
Development of Digestive Tract Problems
Those in debt also have higher incidences of muscle pain, neck pain, ulcers, and numerous problems associated with digestion, and suffer more cardiac arrests.
As stated by a study published in Gastrointestinal and Liver Physiology,
“There is overwhelming experimental and clinical evidence that stress influences gastrointestinal (GI) motility. The most consistent pattern of GI motor alterations induced by various acute stressors is that of delaying gastric emptying while accelerating large bowel transit, which is mimicked by central administration of corticotropin-releasing factor (CRF).”
Lowering of the Immune System
The body’s defense against harmful substances is taken care of by the immune system.
According to a study published in Immunology Today,
“Stress, distress and a variety of psychiatric illnesses, notably the affective disorders, are increasingly reported to be associated with immunosuppression.”
The immune system includes organs, tissues and cells that work in close cooperation together to fight against pathogens which cause infections and diseases of all sorts. Stress has a negative impact on the immune system by creating chronic inflammatory conditions.
Chronic stress will result in the circulation of these harmful substances in the blood which will eventually cause extensive physical damage.
Reduction in Visits to a Doctor’s Office
People who have medical liability or any other credit card obligations are likely to avoid going to the doctor, dentist or hospital for checkups regularly.
They cannot afford medical treatment frequently and so to prevent accumulation of more bills they stop going for any health examination which ultimately wreaks havoc in their lives.
There is a negative correlation between obligations and health of an individual.
Delinquent debt could result in an increase of stress-related activities such as substance abuse and poor nutritional intake which could further contribute to adverse health.
How to Do Away with Obligations to Control Stress
Higher levels of delinquent debts bring in additional stress in the form of being hounded by debt collection agencies.
Threats and pressure tactics are the common strategies adopted by these debt collectors.
Their inhuman policies not only create fear in the minds of lenders but they are capable of terrorizing them to such an extent that they have a negative impact on your health. People with lower level of delinquent liability have a lower mortality rate.
According to a study published in The British Journal of Psychiatry,
“Patients in debt were more likely to harm themselves with greater suicidal intent and, after the episode, to report more symptoms of depression and hopelessness.”
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The Process of Foreclosure
Foreclosure itself involves the following steps:
Defaulting on two or three mortgage payments by the property owner, qualifies for pre-foreclosure, a kind of warning. Once the pre-foreclosure is declared, the creditors raise full and immediate payment of loan that includes both the legal and late fees.
If the property owner fails to make the said payments, foreclosure process is initiated.
Notice of Default:
If the loan is not repaid even after 90 days by the property owner, foreclosure is turned into a legal process. This involves issuance of notice by the bank to the local sheriff for delivering to the property owner.
This notice of default is recorded by the government agency that than allots a date for foreclosure auction.
This is nothing but an open auction of the property on which the payment had been defaulted and is won by the highest bidder. The property owner’s creditors are also at a liberty to purchase the property and sell it privately.
At this stage, the property owner is supposed to vacate the property. Failure to do so may attract unlawful detainer charge meant to evict the property owner.
If the auction of property fails to bring in enough proceeds to satisfy the foreclosed debt, the creditor can bring personal action against the property owner for such shortfall.
Legal Defenses Against Foreclosures
The property owner, who is at the receiving end of a foreclosure, has several legal defenses available:
Error in Mortgage Agreement:
If there is a glaring mistake in the mortgage agreement, it will have a direct bearing on the foreclosure claim.
Signing Mortgage Agreement by Coercion or Fraud:
Signing a mortgage agreement is a voluntary action and cannot be forced upon the property owner. If coercion or threat of any kind is proved, the agreement stands nullified.
At times creditors exploit the desperation of property owner looking for loans or mortgage and obtain the property without paying its fair value. If the property owner fails to pay back the loan, the creditors retain the property and sell it for a higher value than the loan.
Such predatory lending is illegal.
Violation of Statutory Laws:
If the creditor violates any of the laws, the property owner can use it as his or her defense. Even delay in sending notice of default, that needs clear 30 days before initiating foreclosure process, counts towards such violation.
Submission of Original Promissory Note:
Only the original creditors of the property owner can initiate foreclosure process. Once it is set in motion, they are required to provide evidence of original promissory note that explains the payments.
Concluding Thoughts – The Impacts of Debt on Your Overall Health
Foreclosure is a process by which the creditors seek return of loan from the property owner. However, the property owner can take recourse to a foreclosure defense out of several mentioned above to stall such a foreclosure.
If you want to keep your mental and physical health in peak condition, use these tips to avoid the stress of foreclosure!