Many people think that if they ignore the foreclosure proceedings, the punishment for missing mortgage payments will just go away. However, this couldn’t be further from the truth.
Foreclosure is one of the worst things that can happen to any homeowner. Anyone can end up in debt. Traumatic and costly life experiences such as divorce, illness, death of a family member or loss of a job can get you in a huge financial struggle. When this happens, a lot of people simply do nothing and choose to ignore foreclosure proceedings.
Whether you are paralyzed from fear, or you’re just hoping that somehow the bank will forget about you, this is never a good idea. The government couldn’t care less about helping you save your home, especially if you don’t try to take the first step. Ignoring foreclosure proceedings will only make foreclosure happen, and you might even be facing some more consequences. Here is why you should always at least try to save your home from foreclosure.
Your Time to Act Is Limited
A foreclosure complaint isn’t just something that you can throw away into a pile of other documents and get back to it when you feel like it. If you leave your lender to wait, you might be facing a lawsuit on top of a foreclosure. In most states, once you get a foreclosure complaint, you have no more than 20 days to file your response. This maybe sounds like enough time, but the truth is, you have to act fast.
First thing you have to do when facing foreclosure is to contact your lawyer – and in most cases, your attorney won’t be able to see you right away. Then, you have to discuss about your defenses. Sure, you are late on your mortgage payments, but that doesn’t mean that you don’t have a way out of it. However, this is why you have to act as soon as possible. The more in a hurry you are, the more you will panic, and when you are stressed out you likely won’t have a good defense.
If you ignore foreclosure proceedings, you will let the lender know that you don’t really care to give them an answer. In this occasion, the court won’t have any other option but to default you for failing to respond to the complaint. Once a default judgment is granted, the bank will likely be able to go on with foreclosure and to sell your home at auction.
Your House Will Be Sold at Auction
Yes, you’ve read that correctly. If you ignore foreclosure proceedings – or if you fail to figure out a good defense – your house will be sold at auction to the highest bidder. This likely means that your property will be sold not just below market value, but below what you owe on your mortgage. As the home values continue to drop, this happens more and more.
And, no, the bank won’t let you get away with that. Even after your house is sold, you will still be liable for repaying what remains on the debt. A homeowner has to repay the amount of deficiency to the lender. This doesn’t include an equity line or how much you may own on a second mortgage, if you have any.
Once you have lost your home and are left with a huge debt and damaged credit report, you are in a whole new set of issues. There are certain tax implications that arise once you have gone through foreclosure proceedings. You may be eligible for tax exclusions – but a lot of homeowners aren’t. You have to sit with your lawyer or a tax advisor to make sure what your tax liabilities are. If you fail to pay your taxes, you might be facing a lawsuit and an even bigger debt.
Try to Find a Way to Save Your House
There are various reasons why someone is ignoring foreclosure proceedings. When faced with so many emotions and stress, you are likely to feel completely helpless and frozen. You have to know that you are not alone and many people are going through this, especially in hard times we are living in now.
If there is a reason why you are late on your payments, such as divorce, illness or some other legitimate reason for your loss of finances, the lender will likely try to work with you on finding the way you can repay your debt. Believe it or not, the bank doesn’t want you to go through foreclosure proceedings. The legal process is costly and long and your lender will gain more if you are able to continue with your mortgage. This is why it’s likely that you will be given some sort of a repayment plan.
Sell Your House to Save Your Credit Score
If you know that there is no way you will be able to repay your debts, the best thing you can do is to make a quick sale of your house. In most states, you will legally have the rights to sell your house up to five days before the auction date. You likely won’t profit from this sale, but chances are you will get a better offer compared to letting your house be sold at an auction.
Listing your house takes time, and this is typically not an option for homeowners facing foreclosure. However, if you find a reliable direct buyer in Milwaukee, such as Sparks Property Investors LLC, you might be able to save your credit score. Direct buyers will buy your house fast and they will pay you in cash, which enables you to repay your debts right away. If you fear what your future would look like after a foreclosure, contacting a direct buyer is your best way out.