Losing your home in Illinois through foreclosure can be a deeply saddening experience. But, while you may feel hopeless when you are behind on your mortgage, there are methods you could use to stop lenders from taking your home.
Loss mitigation means finding new and better ways to deal with your outstanding debt while not accumulating more. Usually, before your lender files for a foreclosure, they will send you a “right to cure” notice, which details the amount you owe and how you can repay it to stop the foreclosure process. You have 30 days to respond to this notice.
If you can’t come up with the entire amount that’s due, you or your foreclosure defense attorney can reach out to your lender and try to negotiate a loan modification. Your lender may agree to change the terms of your loan, such as by extending the repayment period or lowering your interest rate. A lower interest rate will make your monthly payments more affordable. You must submit documentation proving your financial hardship for your lender to consider a loan modification.
File for bankruptcy
Both Chapter 7 and Chapter 13 bankruptcies will stop a foreclosure, at least for some time. The federal government also allows a certain amount of your home equity to be exempt from seizure in Chapter 7. In a Chapter 13 bankruptcy, you will enter into a repayment plan with your creditors to repay all or part of your debts over three to five years.
Declare yourself “current”
If you are behind on payments but have caught up, you can declare yourself “current.” This declaration is also known as “reinstating” your loan. To do this, you must make a lump-sum payment that covers all the past-due payments plus any fees and interest accrued.
If you have tried everything and foreclosure seems inevitable, you can choose to sell your home. This forced selling is called a “short sale.” Typically, you’ll sell your home for less than what you owe on the mortgage. In addition, the proceeds from the sale will clear the mortgage, leaving you debt-free.