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Dealing with Foreclosure Terms

With the ever increasing number of foreclosures these days, I though it would be useful to provide some common terms that you might see if you find yourself in the unfortunate situation of falling behind on your home. Some of these words can be hard to understand and I generally refer to them as legalese. So, let me try to put some of these things into plain old english for you.

The laws, terminology, and customary practices governing foreclosure vary between states, but they will typically include a legal notice sent to the delinquent borrower and filed in court warning of the process of foreclosure being initiated by the lender, possibly resulting in the property of the homeowner being seized. It is at this time that the entire debt is usually accelerated and must be paid in full to avoid the foreclosure process. Accelerations means the entire loan becomes due instead of just the monthly payment.

If the default is not “cured” through full repayment, a partial repayment the lender agrees to, or some type of loan modification, then the borrower may be notified by the court that the property will be sold at a public auction. This is the official notice of foreclosure and the date of public auction is commonly called the "sale date". In Missouri, which is a non-judicial foreclosure state meaning that no court hearing is required, a lender must notify you by certified mail at least 21 days before the date set for auction. In addition, the notice of foreclosure must be published in the newspaper for the same amount of time. Typically, this is published in some little known attorney read paper or business section. Illinois is a judicial foreclosure state and the proceeding must be initiated in the courts first.

If the home is not sold prior to the sale date in order to eliminate the default, then it will be sent to auction “on the courthouse steps,” though the bidding will actually take place in an office set aside in the local courthouse. If there is no one that will offer enough for the debt to be paid, the home will usually be reclaimed for the amount owed by the bank which holds the loan. The lender may hold on to the house, hoping that the market will improve, or put it up for sale through local Realtors or via private auction.

In some cases, if the home is not sold for the amount of debt owed on the property, a balance will still be due and the lender can sue the borrower for the difference. This is called a deficiency balance. If a deficiency judgment is obtained, the lender can seek collection from the borrower through wage garnishment and other means.

Once the house is sold in foreclosure, the borrower will be notified that they have to vacate the premises. This could be the same day of the sale or it may be after a given notice period given by the new owner. If the borrower does not leave the property, a sheriff can be brought to evict the borrower.

If you find yourself facing a foreclosure, a Chapter 13 bankruptcy can stop the process from moving forward and help you catch up your past due house payments over an extended length of time. It also will group all of your other debt into a monthly payment you can handle while you get back on your feet. A Chapter 13 bankruptcy helps consumers get the debt relief they need and keep their family in their home.

If you have already had a home foreclosed on or you are in a position where you have no income to support a Chapter 13 plan, a Chapter 7 bankruptcy could help you by simply eliminating your debt and giving you a fresh start. Certain debts may not be able to be discharged in a Chapter 7, but the good news is that any deficiency balance due from the foreclosure will be wiped out.

You deserve to have the correct information before your home is sold to the highest bidder. St. Louis bankruptcy attorney James Brown with Castle Law Office has helped more than 20,000 families get the help they deserve and keep property they are entitled to keep and get the fresh start they so desparately need. If you want to find out more about your options, you need to check out the consumer guide "7 Critical Mistakes To Avoid The Dismissal Of Your Bankruptcy Case" or give us a call for free at 1-866-570-8484.

Missouri bankruptcy attorney and Illinois bankruptcy lawyer James Brown wrote and published this guide to make sure you have good, honest information about what bankruptcy can do for you and how to successfully get the help you need.

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