When financial hardship and debt become overwhelming, homeowners often find meeting mortgage payments difficult, and the fear of “losing” their home is a real concern. That friendly bank or lender isn’t so accommodating when you fall on hard times. They expect their payment and may threaten foreclosure. So, what is foreclosure, and what does it mean? At Kain & Henehan, we have dealt with clients who have faced this fear and assisted them with compassion and expert legal guidance.
Foreclosure is losing ownership of your house because you did not meet your mortgage repayment requirements. When you borrow money to buy a home (i.e., take out a mortgage), you get the money on the condition that you pay it back on schedule with interest. If you do not meet these requirements, the bank can take your house since it is used as collateral on your mortgage loan.
Foreclosure is the legal process by which a lender seizes and sells a property due to the homeowner’s failure to meet their mortgage obligations. The lender can initiate foreclosure proceedings to recover the outstanding debt. Foreclosure typically involves a series of steps, including notice of default, public auction, and transfer of ownership. It is a last resort for lenders aimed at recouping their investments.
Sadly, foreclosure often leads to the displacement of families, tarnished credit scores, and significant financial consequences. It is a distressing event highlighting the loss of homeownership and the challenging circumstances the affected individuals and families face.
In most cases, foreclosure starts when you fail to make a specific number of payments on time or at all. But underlying the missing payments are usually financial problems such as a job loss, an unexpected costly emergency, or even individual mismanagement of personal funds and spending. Most banks and lenders wait until you are significantly behind on payments. To the lender, it seems like you stopped making payments, cannot catch up, and cannot be trusted to finish the loan. You’re not likely to find yourself in a foreclosure situation until you have missed several payments.
Before foreclosure proceedings begin, your lender may be open to working with you up to a point. It is in your best interest to talk with your mortgage holder early to alert them of any concerns making it difficult for you to make your payments. Hoping and praying will not address the issue. If you and your lender devise a workable resolution, great. But if not, or if the solution is ultimately not sustainable for you, bankruptcy may be a solution to save your home from foreclosure.
Bankruptcy is a process of restructuring debts so that the debt can be paid. A Chapter 13 bankruptcy can address foreclosure and give you time to get current on your mortgage payments. It allows you to make payments over 3-5 years to your mortgage holder to pay your debt.
Bankruptcy also stops creditors from harassing you about debts owed. Most banks and lenders appreciate the formality of bankruptcy-restructured debt repayment because, at the end of the day, they want their money back. Their goal is not to make you homeless.
Meeting with us as soon as you are concerned about your financial situation and mounting debt is important. Even if it turns out that filing for bankruptcy is not needed right now, you will benefit from learning more about bankruptcy and how it may be a good option if things do not improve.
Facing an uncertain financial future is scary; meeting with us will not be. We, Bill Kain and Margaret Henehan, are here to make you comfortable from the first phone call. We will lay out your options and ensure you understand the best solution for you.
Kain + Henehan is a boutique law firm well-versed in all aspects of personal bankruptcy. Serving Minnesota, especially around the Twin Cities, St. Cloud, and Mendota Heights, we are experienced, compassionate bankruptcy attorneys. Discussing with us what’s happening in your situation can help you learn more about your options and find solutions. You are not alone; with the right guidance, your financial future can be healthy again.