Wednesday, September 15, 2021

Short Sale or Chapter 7 Bankruptcy?

If you are facing foreclosure, you may be looking at options to avoid foreclosure such as a short sale or a deed in lieu of foreclosure, but you also might be thinking about filing for Chapter 7 bankruptcy. Which option is the right one for you? In order to reach a definitive decision, it is always a good idea to seek advice from an experienced Oak Park foreclosure defense attorney about your particular situation and the facts surrounding your case. In the meantime, we want to explain some of the issues that might arise when deciding between a short sale or a Chapter 7 bankruptcy filing.

Thinking About Short Sales and Bankruptcy Based on Your Existing Debt

If you are considering the possibility of a short sale or filing for Chapter 7 bankruptcy, it is important to think carefully about the other debt you have currently. Is the majority of your debt associated with your mortgage, or are you also facing a looming amount of consumer debt from medical bills, credit cards, student loans, or other debt sources? If it is the former—that is, if most of your debt is linked to your mortgage—a short sale may be a strong option for avoiding foreclosure while also allowing you to avoid a bankruptcy filing. Yet if you are also struggling with a significant amount of additional debt, some of the limitations associated with a short sale might mean that filing for Chapter 7 bankruptcy will be more beneficial for you.

Short Sales Can Allow You to Avoid Foreclosure but May Come With Debt

What are those limitations of a short sale when it comes to avoiding foreclosure? First, let us emphasize that short sales can be extremely beneficial for consumers who are struggling largely with mortgage debt and are facing foreclosure. To be clear, a short sale is a process through which your mortgage lender can agree to take a payment for less than the amount you owe on your mortgage and release its lien for that lower amount so that the house is not ultimately sold through the foreclosure process. How does this work? The house will be put up for sale as a short sale, and even if it sells for less than the amount you owe on your mortgage, the lender will accept that amount.

However, there are some potential complications. If your mortgage lender will not waive the deficiency amount—the amount of money still owed based on the sales price of the house and your mortgage amount—then you will still owe that money. These deficiencies can range widely in amount, from several thousand dollars to tens of thousands of dollars. Your lawyer can help you to negotiate a waiver from the lender so that you do not owe this money. Yet even if the lender agrees and forgives the remaining amount, you will likely be required to pay taxes on that forgiven amount. While the tax on $5,000 of forgiven debt will not be particularly steep, the tax consequences of having, for example, $100,000 or more of mortgage debt forgiven can be significant.

Learn More From a Foreclosure Defense Lawyer in Oak Park

If you are considering a short sale or bankruptcy, you should seek advice from our Oak Park foreclosure defense attorneys today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

Five Things to Know About Short Sales

What is a Consent Foreclosure?

Tuesday, August 10, 2021

Five Things to Know About Short Sales

If you are facing foreclosure due to the inability to make mortgage payments, it is important to consider ways of avoiding foreclosure—even if you cannot remain in your home. While a number of foreclosure avoidance options may not allow a struggling homeowner to keep the house, they can prevent a damaging foreclosure sale and everything it means for the debtor’s credit. Short sales are one option to avoid foreclosure in Oak Park and throughout Illinois. If you have never considered foreclosure prevention options in the past, the prospect of a short sale can be confusing. However, our experienced Oak Park foreclosure defense lawyers are here to assist you. The following are five things to know about short sales.

Short Sales are One Option to Avoid Foreclosure

As we mentioned above, short sales are one option to avoid foreclosure. Other options may include, for example, a deed-in-lieu of foreclosure or even a Chapter 13 bankruptcy filing if you are eligible. Unlike a short sale and a deed-in-lieu, a Chapter 13 bankruptcy can allow you to remain in your home and to get back on track with mortgage payments. When Chapter 13 is not an option, a short sale or deed-in-lieu can allow you to avoid dealing with the more severe consequences of a foreclosure.

Short Sales Can Still Damage Your Credit, But to a Lesser Extent Than Foreclosure

You should know that a short sale will still result in some damage to your credit. However, its effects will be much less significant than a foreclosure.

You Will Need Lender Approval to Do a Short Sale

You cannot simply decide to do a short sale on your own and move forward with the process. Instead, you will need to seek approval from the lender, and it will be critical to ensure that the lender agrees to forgive any remaining debt after the sale goes through.

Short Sales Can Take Some Time

Since short sales are complex, you should not expect that they will necessarily be quick. While short sales can happen relatively quickly, they can take many months.

Short Sales Tend to Fall Through More Often Than Traditional House Sales

If you are trying to sell your home through a short sale, it is essential to keep in mind that these are complex transactions and that there are often more routes for the lender or the buyer to back out, according to Bankrate. As such, while short sales are frequently strong foreclosure avoidance options for struggling homeowners, it is important to know that short sales do fall through with some frequency.

Contact Our Oak Park Foreclosure Defense Lawyers

Do you have questions about avoiding foreclosure or about short sales more specifically? One of our experienced Oak Park foreclosure defense attorneys can speak with you today about your options. We routinely assist homeowners with a variety of foreclosure defense strategies, including short sales, deed-in-lieu of foreclosure, and Chapter 13 bankruptcy. Contact the Emerson Law Firm today for more information about how we can assist you.



See Related Blog Posts:

What is a Consent Foreclosure?

My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?


Friday, July 2, 2021

What is a Consent Foreclosure?

When you are struggling to make payments on your mortgage and are considering options to avoid a foreclosure sale of your property, such as a short sale or a deed in lieu of foreclosure, it is also important to understand how a consent foreclosure works. Illinois is a judicial foreclosure state, which means that the lender will need to file a foreclosure action in court and go through a judicial process before a foreclosure can be completed. When the lender must go through this extensive foreclosure lawsuit process, the lender will end up spending a significant amount of time and money on attorney’s fees and court costs. As such, the lender might consider alternate options to a judicial foreclosure in Illinois if you know you cannot get caught up on your mortgage payments.

While a short sale or a deed-in-lieu can be beneficial for many homeowners who are facing foreclosure, a consent foreclosure can also be beneficial to the homeowner. Our Oak Park foreclosure defense lawyers want to provide you with more information.

Why a Consent Foreclosure Can be Helpful to a Homeowner Facing Foreclosure

Anyone who is facing foreclosure should know that, if the lender wins a foreclosure lawsuit, not only can your home be seized and sold, but the lender can continue to pursue a deficiency judgment against you in order to recover the difference between the foreclosure sale price of the property and the amount you still owe on the mortgage. For example, if you have a mortgage and still owe $300,000 on that loan but the foreclosure sale results in the property being sold for only $200,000, the bank will be owed $100,000—the difference between the foreclosure sale price and the amount you owe on the mortgage. In such scenarios, the lender may be able to pursue a deficiency judgment in order to collect that remaining $100,000 from you.

However, the lender has an interest in saving the time and money associated with a foreclosure lawsuit. Accordingly, if you agree to the foreclosure—a consent foreclosure—the lender might agree to waive its right to seek a deficiency judgment in the event that the house sells for less than what you owe on the mortgage.

How Consent Foreclosures Work Under Illinois Law

Under Illinois law, the statute concerning consent foreclosures begins with the phrase “no objection.” The law clarifies that a court can enter a foreclosure judgment when the homeowner consents to the foreclosure if the lender agrees to waive its right to a deficiency judgment and if all affected parties consent to the entry of a foreclosure judgment.

It will be important to have an Oak Park foreclosure lawyer on your side during this process to ensure that the terms of the consent judgment are crafted properly and that you will not have to worry about the lender pursuing a deficiency judgment once the foreclosure judgment is entered.

Contact Our Oak Park Foreclosure Attorneys

If you have any questions about how a consent judgment works, or if you want to pursue other options to avoid foreclosure such as a short sale or a deed in lieu, one of our experienced foreclosure defense attorneys in Oak Park can speak with you today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?

Is a Mortgage Modification My Only Option to Avoid Foreclosure?

Saturday, June 12, 2021

My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?

When you are significantly behind on your mortgage payments, you may receive notice from the bank that your home is going into foreclosure. For many consumers who are struggling with mortgage debt, it is more important to avoid having the lender foreclose on the property than to remain in the property. Accordingly, in these situations, a homeowner might be considering two options for avoiding foreclosure — a short sale or a deed in lieu of foreclosure. You might have read about these options, but you may not be certain if either one is the right choice for you. While it is critical to work with a foreclosure defense attorney in Oak Park on any action you plan to take to avoid foreclosure, you can learn more about these options in the meantime.

Short Sales or Deeds in Lieu of Foreclosure Can Allow You to Avoid Foreclosure

Both short sales and deeds in lieu of foreclosure, the latter of which is often described simply as a “deed in lieu,” are options for avoiding foreclosure. As such, if your goal is to avoid foreclosure, either of these are possibilities that could be in your best interest. However, it is important to know that these options are distinct from one another and involve different processes.

If you are considering a short sale or a deed in lieu to avoid a foreclosure under Illinois law, you should know that short sales and deeds in lieu will still affect your credit. While neither short sales or deeds in lieu will impact your credit as significantly as a foreclosure, you will still see a noticeable dip in your credit score. So, should you choose a short sale or a deed in lieu? Our Oak Park foreclosure defense attorneys can provide you with details about each of these processes.

What is a Short Sale?

A short sale is a sale of your home in which you sell it to a third-party buyer (e.g., another consumer, someone who wants to use the property for rental income, or somebody who plans to do something else with the property), but you sell the home for less than the total amount you owe on your mortgage. For example, if you still owe $200,000 on your mortgage, you might sell the house for $150,000 in order to avoid foreclosure. However, the bank must agree to the short sale before you can complete the transaction. After the bank agrees to the short sale, you will typically need to submit an application for loss mitigation.

It is important to work with a lawyer who can ensure that the bank has agreed to the short sale and has also agreed to forgive the remaining debt not covered by the short sale proceeds. However, you should be aware that any forgiven debt will likely count as taxable income, and you will be responsible for paying taxes on that amount the same way you would any other income.

What is a Deed in Lieu?

With a deed in lieu, rather than selling your house to repay some of the amount you still owe, you agree to transfer the title of your home to the bank. Like a short sale, you will need to get the bank’s approval for a deed in lieu before it can happen. However, you can still be responsible for the difference between the amount owed on your mortgage and the fair market value of your home.

Contact Our Foreclosure Defense Lawyers in Oak Park

If you have questions about avoiding foreclosure through a short sale or deed in lieu, our Oak Park foreclosure defense attorneys can help. Contact the Emerson Law Firm today.



See Related Blog Posts:

Is a Mortgage Modification My Only Option to Avoid Foreclosure?

How Long Can Foreclosure Suspensions Last?



Friday, April 30, 2021

Is a Mortgage Modification My Only Option to Avoid Foreclosure?

When you are struggling to make mortgage payments, the prospect of losing your home can be devastating. For far too many Americans, the COVID-19 pandemic has resulted in immense job losses and the inability to make payments on loans and other lines of credit, including mortgages. Since there is so much information about foreclosure on the internet, it can be difficult to obtain factual information that can actually help you to understand your options. Even if you have not conducted internet searches for options to avoid foreclosure, you might not be getting the whole picture from a friend or family member who relied on a mortgage modification to avoid losing their home.

In short, misconceptions about foreclosure prevention abound, and it is critical to speak with an experienced Oak Park foreclosure defense attorney who can provide you with accurate and detailed information about the full range of options that may be available to you. Mortgage modification may be one option for avoiding foreclosure, but it is not the only option.

Seek a Mortgage Modification

A mortgage modification can be one path to avoiding foreclosure. With a mortgage or loan modification, the homeowner asks the lender to change the terms of the loan in order to make the monthly mortgage payment lower. A modification can involve adding additional payments to the loan, extending the length of the loan, or reducing the interest rate, for example.

Obtain a Forbearance

If you are struggling in the short term but you expect to be able to resume making regular mortgage payments in the near future, your lender may be willing to agree to a forbearance. With a forbearance agreement, you may be able to make reduced mortgage payments, or no mortgage payments at all, for a particular period of time.

File for Chapter 13 Bankruptcy

Chapter 13 bankruptcy is an extremely helpful tool for homeowners who want to avoid foreclosure and get back on track with their loan. In a Chapter 13 bankruptcy, the automatic stay will prevent the lender from moving forward with any foreclosure actions, and you will be able to include your mortgage in your bankruptcy repayment plan. However, to qualify for Chapter 13 bankruptcy, you will need to be able to show the court that you can make payments on your bankruptcy plan over a period of three to five years.

Refinance Your Loan

Sometimes homeowners who are struggling to make payments have loans with unfavorable terms. It may be possible to refinance your loan for a better rate, thereby resulting in significantly lower monthly mortgage payments. However, refinancing may not be an option if your credit has already taken a hit due to missed mortgage payments.

Consider a Short Sale

The above options are all ways that you may be able to prevent foreclosure and remain in your home, which is what most homeowners are hoping for when they begin looking for information about foreclosure avoidance. Yet in some cases, it is not possible to remain in the home. With a short sale, you will not be able to keep your house, but you will be able to avoid having a foreclosure on your credit.

Contact Our Oak Park Foreclosure Defense Lawyers

If you have questions about foreclosure avoidance options, one of our experienced Oak Park foreclosure defense attorneys can help you. Contact the Emerson Law Firm to learn about your options.



See Related Blog Posts:

How Long Can Foreclosure Suspensions Last?

Extended Foreclosure Moratorium Will Help Homeowners

Friday, March 26, 2021

How Long Can Foreclosure Suspensions Last?

For homeowners in Oak Park and across the country, the suspension of evictions and foreclosures during the pandemic has meant that concerns about losing a home due to the inability to make mortgage payments have not loomed as prominently as they likely would have given the effects of COVID-19 on the economy. However, each time the eviction and foreclosure moratoriums have been extended, they have had a clear end date. According to a recent CNN article, struggling homeowners should begin making plans to ensure that their homes do not go into foreclosure when the current moratorium expires. As that article underscores, foreclosure suspensions simply cannot last forever.

Consider the Current Moratorium

The initial eviction and foreclosure moratoriums that went into effect early on in the pandemic were extended, but homeowners should keep in mind that expiration dates are not too far in the future. The current foreclosure moratorium will expire at the end of June 2021, and the current statistics are grim when it comes to struggling individuals and families who could be at risk of losing their homes. As the article underscores, there are about “six million families behind on their rent and three million behind on their mortgage.”

What will happen to struggling homeowners with the expiration of the foreclosure moratorium? Eligible homeowners currently can have a forbearance of up to 18 months, with unpaid mortgage payments during that time period getting added onto the total amount of the mortgage so that the payments are made up later on. Some homeowners will be eligible to seek a mortgage modification so that their monthly payments are lowered. In addition, according to the article, “Congress has appropriated $10 billion in mortgage payment relief, which will likely go towards deeper assistance for those for whom the existing relief isn’t enough.”

Options for Homeowners When the Moratorium Ends

When the foreclosure moratorium ends and mortgage payments are due, what options will homeowners have if they still have not recovered financially from the pandemic and have not been able to find employment? Generally speaking, homeowners may be able to consider similar foreclosure-prevention options that were available prior to the pandemic, from mortgage modifications to the possibility of filing for Chapter 13 bankruptcy. Yet it is important to remember that Chapter 13 bankruptcy is only an option for staying in your home and avoiding foreclosure if you have an income and are able to show that you can make the payments associated with your debt repayment plan.

Struggling homeowners should also speak with a foreclosure defense attorney about additional relief options that may become available by the time mortgage payments are due. Your foreclosure defense lawyer can discuss the variety of options that may be available to you to avoid foreclosure and can help you with a Chapter 13 bankruptcy filing if that is the best option for you and your family.

Contact Our Oak Park Foreclosure Defense Lawyers

Do you need assistance avoiding foreclosure? Our Oak Park foreclosure defense attorneys are here to help. Contact the Emerson Law Firm for more information about preventing foreclosure and remaining in your home.



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Extended Foreclosure Moratorium Will Help Homeowners

Foreclosure Ban Extended

Monday, February 22, 2021

Extended Foreclosure Moratorium Will Help Homeowners

While one of President Biden’s first executive orders was to extend the foreclosure moratorium until the end of March, it is important for homeowners who are at risk of foreclosure to know that the moratorium has been further extended. According to a recent CNBC report, government mortgage forbearance programs have been extended for at least “an additional six months” along with foreclosure relief programs. According to the report, the extension will cover approximately 70% of mortgages for single-family homes across the country. If you have lost your job as a result of the COVID-19 pandemic and you are concerned about the possibility of foreclosure, it is critical to learn about your current options under the federal programs and to seek long-term advice from an Oak Park foreclosure defense attorney about options to help you stay in your home.

Details of the Extended Foreclosure Relief Measures

Recognizing that homeowners throughout the U.S. are struggling to pay their bills, including their mortgages, as a result of the pandemic-related economic downturn, President Biden extended foreclosure relief measures to help homeowners who cannot pay their mortgages and may be at risk of foreclosure. According to the report, President Biden directed federal housing regulators—including the Department of Housing and Urban Development, the Department of Veterans Affairs, and the Department of Agriculture—to do the following:
  • Extend the existing foreclosure ban (also known as a foreclosure moratorium) through June 2021;
  • Allow homeowners to enroll in available mortgage payment forbearance programs through June 2021; and
  • Extend existing mortgage forbearance programs for homeowners for six more months for those homeowners who entered into a mortgage forbearance program prior to June 30, 2020, but those homeowners will need to “request the additional extension every three months,” according to the report.
Matthew Ammon, the acting HUD secretary, explained how these steps “will provide both immediate relief to those in desperate need of assistance and help more homeowners keep their homes and resume their payments when the pandemic subsides.”

Who Owns Your Mortgage?

It is important to know that the relief options are only applicable to federally owned and federally backed mortgages. As such, if you want to take advantage of any of the relief options, you will need to know who owns your mortgage. Given that mortgages are often sold and resold with some regularity, it can be difficult to know if you are eligible for any of the programs mentioned above. How can you find out who owns your mortgage?

You can use a loan lookup tool offered by Fannie Mae and Freddie Mac to determine if either owns your loan, and you can also contact your mortgage servicer to inquire. As of February 2021, approximately 2.7 million homeowners are currently taking advantage of a mortgage forbearance plan, whether it is through the federal government or through a specific mortgage servicer or lender.

Seek Advice From an Oak Park Foreclosure Defense Attorney

If you need help with your options to avoid foreclosure, one of our experienced Oak Park foreclosure defense attorneys can speak with you today. From available foreclosure moratorium options to the possibility of Chapter 13 bankruptcy, our firm can discuss options for stopping foreclosure and remaining in your home. Contact the Emerson Law Firm to learn more.



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Foreclosure Ban Extended

Cook County Anticipates Wave of Foreclosures and Evictions

Sunday, January 24, 2021

Foreclosure Ban Extended

The COVID-19 pandemic has resulted in substantial hardships for many families in Oak Park and throughout the country, including difficulties paying rent or paying the mortgage. Early on in the pandemic, many homeowners who were at risk of losing their homes were able to avoid foreclosure through a foreclosure ban. While mortgages that are not federally backed have required homeowners to attempt to work out mortgage modifications or other arrangements with lenders to prevent foreclosure, President Biden recently signed an executive order that will extend a ban on foreclosures and evictions at least through the end of March.

What does the extension on the foreclosure ban mean for you? If you are not covered by the extended foreclosure ban or need assistance with foreclosure avoidance after March, what can you do?

Getting More Information About President Biden’s Foreclosure Actions

The most recent stimulus bill extended protections through the end of January, according to a recent article in CNN Business, and President Biden’s executive order will extend those protections for federally backed mortgages until March 31. In addition, according to the article, President Biden asked the Department of Veterans Affairs, the Department of Agriculture, and the Department of Housing and Urban Development (HUD) to “accept applications for forbearance for federally guaranteed mortgages until that time as well.”

For anyone with a federally backed or federally guaranteed mortgage, the recent actions taken by the president could provide more temporary relief. Yet as the article points out, some “administration officials say the bans on evictions and foreclosures are not enough.” Moreover, as we pointed out, homeowners who do not have federally backed or federally guaranteed mortgages are not covered. Approximately 70% of all U.S. mortgages are federally backed, according to an article in the Chicago Tribune. Illinois protections have also been able to help homeowners with private mortgages. That article reports that about 1.28 million Illinois households say that they are unable to pay their mortgages, which is approximately one-third of all Illinois residents who have mortgages.

What You Should Do if You Cannot Pay Your Mortgage

If your mortgage is not covered by an existing foreclosure ban and you could be at risk of foreclosure due to the inability to make mortgage payments, you should find out about options by speaking with an Oak Park foreclosure defense attorney. You may be able to prevent foreclosure with actions such as:
  • Filing for Chapter 13 bankruptcy;
  • Seeking a mortgage loan modification;
  • Requesting a forbearance from the lender; or
  • Refinance your mortgage if you are not already significantly behind on payments.
Contact an Oak Park Foreclosure Defense Lawyer

Being unable to make your mortgage payments can be incredibly stressful, especially when you are concerned that you may be at risk of foreclosure. There are many different options that may be available to you to avoid foreclosure, even if your mortgage is not one of the federally backed mortgages included in the recent extension of the foreclosure ban. Do you have questions about avoiding foreclosure in Illinois? One of the experienced Oak Park foreclosure defense attorneys at our firm can help you. Contact the Emerson Law Firm to learn more about the services we provide to homeowners and other consumers in and around Oak Park.


See Related Blog Posts:
Cook County Anticipates Wave of Foreclosures and Evictions
What Can I Do to Avoid Foreclosure During the COVID-19 Pandemic?