When a homeowner encounters financial difficulties, making normal monthly mortgage payments can become a struggle. Missing a few payments and quickly catching up can prevent the lender from taking action to reclaim the property, but not all homeowners have the ability to rapidly make good on their home loan. If the lender moves toward foreclosure, working with an Indiana foreclosure attorney is often the best way to avoid losing the property.
What is a foreclosure?
Foreclosure is the legal process by which a lender takes possession of a home due to the borrower’s failure to repay the loan as agreed. The bank or lender then sells the property to try and get the full value of the loan back.
For most homeowners, foreclosure is the worst outcome imaginable. After all, you probably spent a great deal of time thinking about the type of home you wanted to buy, checking out various locations, and going through the process of putting in an offer and moving through the closing process. Losing your home can be incredibly stressful, and also brings on a whole new set of challenges in regard to where to move next.
Can an attorney help stop a foreclosure?
Working with an attorney is a great way to fully understand all available options for stopping a foreclosure. Your attorney works on your behalf and will provide clear and accurate guidance on how to proceed toward an outcome that’s aligned with your needs and goals.
A settlement conference is the first step in preventing foreclosure. This is a meeting between you (or your legal representative) and your lender (or the lender’s legal representative) to discuss options agreeable to both parties.
Loan modification is another option and works by altering the provisions of your loan to make it easier for you to catch up and stay current on your mortgage payments. Your attorney can help ensure you understand all of the terms, and that the modification works with your financial circumstances.
A forbearance agreement is a great option if the circumstances that led you to fall behind on your mortgage are temporary. These agreements reduce your monthly payments or put them on hold for a defined period of time while you get back on your feet.
Bankruptcy is another way to slow or stop a foreclosure. It’s important to understand, however, that bankruptcy will remain listed on your credit report for many years afterward and can make it harder for you to secure future lines of credit. The bankruptcy must also be filed properly and structured in a way that allows you to keep your home.
What if I don’t want a foreclosure on my record but am willing to leave my home?
If your primary goal is to avoid having a foreclosure on your financial record, or to retain your privacy, an attorney can help. Be sure to let your attorney know exactly what you are trying to accomplish so they can structure the right path.
A short sale allows you to sell the home for a price lower than what is owed on your mortgage. The lender must approve the sale, but a successful short sale allows you to walk away without going through the foreclosure process.
Deed in lieu of foreclosure is another approach in which you sign over the deed to your home to the lender. While you won’t be able to remain living in the property, the lender agrees to accept the deed and forgive the remaining amount owed on the loan.
One final approach is an option if your lender or loan servicer made errors in handling your loan. In such cases you may be able to stop or slow a foreclosure and could be eligible for some of the options listed above that would allow you to keep your home.
When should I contact an attorney about preventing foreclosure?
As with most legal needs, it’s always better to reach out to an attorney as soon as possible. While there are a few ways to stop or delay foreclosure at the last minute, it’s far better to begin the process before a foreclosure sale date is looming.
Be prepared to share the full details of your home loan, financial circumstances, and projected earnings and financial stability. You should also think about what you are trying to accomplish, which helps your Indiana foreclosure attorney create a plan to get you where you would like to be.
Your attorney will outline all available options and explain the pros and cons of each. You’ll have a trusted legal advisor to turn to as you decide the best path forward, and a guide to lead you through the process. In many cases, a skilled attorney can prevent a foreclosure and help you reach your goal of remaining in your home and regaining financial stability.