Options For Homeowners Facing Foreclosure

If you have missed a payment on your mortgage or have received notice from your lender they are filing a foreclosure action, you still have some options. You may be able to save your house and prevent being saddled with unmanageable debt.


A foreclosure is the legal process where a mortgage lender takes back a piece of property from the party to whom it loaned funds to originally. Foreclosure permits the lender to evict the occupier, resell the property and potentially assess a deficiency balance (the difference between the outstanding loan and the foreclosure sale price).

Short Sale

A short sale is where the house is sold for less than the outstanding loan. The lender may then agree to "forgive" the remaining balance of the loan. While this may be a good option for some homeowners, there are potentially negative credit and tax implications.

Loan Modification

Given the precipitous drop in housing values, one would think most lenders would be agreeable to loan modifications, where they recognize the change in value of the security interest (the house) and provide a mortgage that reflects an adjusted value. Many lenders, however, are unwilling to negotiate and/or require homeowners to go through a time consuming bureaucratic process. Having an experienced Chicago loan modification attorney on your side helps make the process much more manageable.

Forbearance Agreements

A forbearance agreement is a short term repayment plan that is negotiated with the mortgage lender, giving individuals an opportunity to bring their mortgage current without filing for bankruptcy protection. This option is generally used when there has been a short term interruption in income, but now there is income sufficient to bring the mortgage current over time.

Foreclosure Defense Actions

Here, a Chicago foreclosure defense attorney actually battles the foreclosure in state court, extending the amount of time that the individual can stay in their home and eventually negotiate a loan modification or file for Chapter 13 protection. This is generally a good option where the individual's income has not yet returned, but it is projected that it will in the future and time is needed to work out arrangements.


For many facing foreclosure, bankruptcy may be best suited to meet their needs. The two most common bankruptcy options are:

Chapter 13

A Chapter 13 is for a homeowner with current steady income, but who has had an interruption in income or been overwhelmed by other debts. It can save a home from foreclosure by restructuring the homeowner's debt and allowing the homeowner to make manageable payments.

Chapter 7

A Chapter 7 filing may not protect your property, but it can be used to discharge a deficiency balance remaining after a foreclosure sale. It enables a debtor to emerge free of most debt, and obtain a financial fresh start. Eligibility, however, is dependent on your income and some of your assets may be lost.

If you are facing a foreclosure, speak with an experienced Chicago bankruptcy & consumer rights attorney, who can review your situation and provide experienced advice, allowing you to make an informed decision as to what your best option is.