Thursday, July 16, 2020

Long-Term Effects of Foreclosure

Nobody who owns a home wants to risk losing it due to foreclosure. Indeed, if you are struggling to make your mortgage payments, you should get in touch with an Oak Park foreclosure defense attorney as soon as possible to find out about options for keeping your home. If you are still employed, you could be eligible to file for Chapter 13 bankruptcy, which ultimately can allow you to prevent a foreclosure from moving forward and to get back on track with mortgage payments. If you can, avoiding foreclosure is in your best interest. According to a recent study conducted by Stanford University economist Rebecca Diamond, “foreclosures can have devastating, long-term impacts.” To be sure, the long-term effects of a foreclosure can go far beyond the loss of a home.

Homeowners Who Go Through Foreclosure are Less Likely to Own Future Homes
What are some of the long-term impacts of foreclosure? According to the study, one of the most common is that homeowners who go through a foreclosure and lose their homes are less likely to own another home in the future. It is not simply out of a desire to avoid purchasing a home, but rather as a result of longer term financial difficulties. Indeed, “their living arrangements become less secure, and they default on other debts more often.”

Tenants can be Impacted
While we often think about foreclosure as involving residential homeowners who are using the property as a primary residence, landlords can also face foreclosure, and tenants can be negatively impacted. Although foreclosure does not result in a landlord losing his or her home, it can lead to tenant evictions, and tenants having difficulty finding another place to live on somewhat short notice.

On the whole, however, landlords who go through a foreclosure, and tenants who are also impacted, are both far less affected by foreclosure than homeowners who lose their primary residence. In the cases of primary residence foreclosures, those homeowners tend to have long-term financial problems after the foreclosure process is completed.

Considering Homeowners “On the Margins”
Given the economic difficulties that many people are currently facing due to the COVID-19 pandemic, the study emphasizes that it is also necessary to consider homeowners who are currently “on the margins.” These are the homeowners who are behind on mortgage payments and are at serious risk of foreclosure, but for whom foreclosure may not be imminent. With these types of homeowners, it is important to think through a variety of foreclosure defense options that can allow them to remain in their homes, and to avoid ending up in the long-term risk category of so many homeowners who do end up having their properties foreclosed.

Contact an Oak Park Foreclosure Defense Attorney
If you need help avoiding foreclosure, or if you have questions about how Chapter 13 bankruptcy may be able to prevent foreclosure, you should seek advice from an experienced Oak Park foreclosure defense lawyer. One of the advocates at our firm can speak with you today about your options. Contact the Emerson Law Firm to learn more about the services we provide to clients throughout the Chicago area.

See Related Blog Posts:

Foreclosure Moratorium Re-Extended

Bankruptcy and Home Foreclosure: What You Should Know