If you fail to make payments on your Illinois home loan, the lender that services this debt may foreclose on the property. This means that it will take possession of the property and take steps to recoup its losses. However, it may be possible to postpone or prevent a foreclosure from taking place.
Do you have positive equity in your home?
It’s unlikely that a lender will try to foreclose on a home that has negative equity. However, if you stop making payments, it’s possible that the company servicing the loan will attempt to get a judgment against you. This would theoretically allow that entity to garnish your wages or take other actions to get the money it is owed. Of course, state or federal law may provide you with foreclosure defenses that might prevent your home from being seized even if you have positive equity in it.
What happens to negative equity in your home?
It may be possible to convert negative equity in your home from a secured to an unsecured debt. Doing so may make it easier to discharge the obligation in bankruptcy, and it will also likely reduce the amount of your mortgage payment. Getting rid of negative equity may also allow you to sell the home because you’ll be able to raise enough money to pay off the mortgage. By paying off the mortgage in full, you won’t have to worry about a foreclosure or other creditor collection actions that might harm your credit score or creditworthiness.
If you’re behind on your mortgage, contact your lender immediately. Doing so may allow you to avoid a foreclosure or other actions that might result in long-term consequences. However, if your lender won’t negotiate, filing for bankruptcy may help postpone or prevent a foreclosure.