When a homeowner cannot afford to make his or her mortgage payments, the home may go into foreclosure. In short, this means the homeowner’s mortgage lender takes possession of the home. However, this is not an instant process. The foreclosure process can take close to a year to complete in Illinois and early in the process, a homeowner can reverse the process and keep his or her home.
Foreclosure is often discussed in conjunction with bankruptcy. Both are legal proceedings that can affect individuals facing financial hardship. Below are three ways a homeowner can avoid the foreclosure process and keep his or her home. In Illinois, all foreclosures are judicial foreclosures, which means that the lenders involves the court to complete the foreclosure process.
Modify your Mortgage Loan
One way to steer yourself away from foreclosure is to modify your mortgage loan so it becomes easier for you to make your monthly payments. This can be done by lowering the interest rate, lowering the amount of principal for the loan, or extending its term. Sometimes, the borrower can make a single balloon payment to cover his or her missed payments or add them to other payments through the loan’s life to catch up.
Negotiate with Your Lender to Avoid Foreclosure
If you are in danger of going into foreclosure, you need to be communicating with your lender. If you cannot modify your mortgage loan to make it easier to pay, talk to your lender about other ways you can get caught up on the payments and avoid foreclosure. Be truthful about your situation: If you have lost your job, tell your lender this when you ask for temporary assistance.
You can consider selling the home as a short sale or completing a deed in lieu of foreclosure, which means that you release the title to the lender in exchange for being released from the mortgage contract. In both of these scenarios, you will have to leave the home.
File for Bankruptcy
Filing for bankruptcy is a serious choice, but it can be the right choice. When you file for bankruptcy, an automatic stay goes into effect. This will stop the foreclosure process. Your lender may file a motion for relief from the stay, reinstating the process, but this is not an instant process and in any case, filing for bankruptcy will give you time to potentially negotiate new mortgage terms or work out one of the alternatives to foreclosure discussed above.
Work with an Experienced Elk Grove Bankruptcy Lawyer
If you are in a position with your mortgage that has you facing foreclosure, work with an experienced bankruptcy lawyer to determine your options. Bankruptcy might be a viable option for you, but there could be other, better choices available as well. Contact our team of bankruptcy lawyers at Newland & Newland, LLP today to set up your initial consultation with us to make this determination. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Matt Jones)