Sometimes, people just can't make their home loan payments and end up defaulting on their mortgage. Here's what you need to know and how you can avoid this dreaded situation.

What is mortgage default?

Defaulting on your mortgage means not honoring the terms of your home loan agreement, says mortgage consultant Casey Fleming, author of How to Get the Best Mortgage: How to Get the Best Mortgage, and author of the book The Loan Guide. Of course, delinquent or late payments are the most common problem, but that's not the only violation that can land a homeowner in trouble.

Homeowners can also fall behind on their mortgages for not paying property taxes, not having homeowner's insurance, or using their homes for illegal activities, such as selling cocaine. In other words, there are many ways to void your mortgage contract.

While the length of time a mortgage loan can be in default varies by lender and contract, the general time frame to be aware of is 30 days past due. Once your payment is more than one month late, the lender will send you a notice of default and ask you to correct the problem. If you don't correct it, the lender will usually send more reminders and call you to make sure it wasn't an oversight.

As unpleasant as these collection notices may be, the biggest mistake you can make is ignoring them.

"Communication is key," says Whitney Fite, president of Angel Oak Home Loans in Atlanta." If you know you're going to have trouble making your payments on time, contact your home servicer as early as possible to explore your options.

In fact, it's a good idea to contact the servicer before your payment is due to discuss your options.

Believe it or not, mortgage lenders are not loan sharks who will break your kneecaps as soon as they hear you can't make your payments. In fact, they may be flexible enough to lower or even suspend payments for a period of time.

"If you talk to them," Fleming says, "you can usually figure it out.

By speaking up, you may be able to avoid a mortgage default altogether, which is a good thing for a number of reasons: It means you'll be in good standing with your lender, and it also prevents your financial problems from lowering your credit score and affecting your ability to borrow in the future.

So what happens if you ignore these notices? After 120 days of late payments, a default can turn into something much worse: foreclosure. In this case, the lender takes possession of the home and attempts to sell it to recoup its losses.

Once the lender starts the foreclosure process, you'll have to pack up and move, and don't think you'll have time to linger.

"It's rare for a foreclosure to last longer than six to nine months," says Fleming.

A foreclosure stays on your credit record for seven years, which can make it harder to buy a new home later. And here's the bad news: Once the property is foreclosed on and resold, the borrower could be reported to the IRS for the loss the lender caused you by borrowing the money.

"The IRS considers the lender's financial loss to be the borrower's taxable income," says Fitt." Many people don't realize this until the following January, when they receive a 1099 tax bill in the mail for thousands of dollars.

The key point to remember is not to be afraid of lenders if you foresee problems in paying your mortgage.

"Mortgage lenders don't want to foreclose," Fleming says." They're not in the business. They are in the business of collecting for you. If they foreclose, their revenue stream on your mortgage stops.

That's why they are often willing to work with you if you find yourself unable to make your monthly payments. The thing is, they will be more understanding if you reach out to them, rather than waiting until they call and ask you what's wrong.