The Financial Consequences Of Foreclosure

The primary financial consequence of foreclosure is the stain it puts on your record. This weighs heavily on the various aspects of your financial life throughout time. For instance, once a foreclosure is on your record, it impairs your ability to buy another property with a conforming loan for up to four years. Besides this, it dramatically affects your credit – and rebuilding your credit to get any type of consumer loan takes significant time. This is perhaps the most direct and devastating effect of foreclosure people experience.

What You Should Know When Headed For A Foreclosure

While minor differences may arise in a case because a lender can be more lenient than the statute necessarily mandates, each foreclosure is almost always the same since this is a statutory process. Because of this, perhaps the most helpful thing to understand is simply the general process of foreclosure…

Judicial Foreclosure

If you have received a foreclosure summons, it means that the lender elected to go with a judicial foreclosure. (This is not a common route for most lenders in California to take.) In this situation, you have 30 days from the date the summons and complaint are served to file an answer with the court and proceed to trial on valuation. It’s important to know that if you have been served with a summons, you must meet that 30-day deadline unless you are able to obtain an extension from counsel on the other side. However, while counsel will typically extend an extension to the other counsel (attorney) as a courtesy, they are less likely to do the same for unrepresented individuals.

Non-Judicial Foreclosure

In any case, it is more likely that you will face a non-judicial foreclosure in California. This means you will most likely receive a letter from the lender even before a notice of default and election to sell is recorded. At this point, it is vital to assess your overall condition, decide whether you want to and can retain the house, and see if the lender will grant a remedy – such as a loan modification or a forbearance agreement. On the other hand, if the lender does grant a remedy, you may need to pursue a lawsuit in state court seeking a temporary restraining order and preliminary injunction or a bankruptcy filing where the automatic stay would kick in to prevent the process from going further.

When It Makes Sense To Throw In The Towel

Although very rare in California, there are circumstances where giving up on your property makes sense. This often happens when a property is considerably “underwater” – which is often the case in less desirable or rural areas.

Fortunately, California has what is known as a “one form of action” rule. This means that if a lender proceeds against the collateral, which they almost always do, they do not have a right to any deficiency claim. So, if the property has a $500,000 loan and sells for $300,000, the lender cannot attempt to recover the $200,000 difference from you.

The Importance Of Working With An Attorney

Although the process is largely the same from a bird’s eye view, we strongly encourage everyone facing foreclosure to consult with counsel and evaluate their individual case – because every case ultimately hinges on facts unique to each situation.

Of course, you could hypothetically wait until the last second before the foreclosure sale takes place to hire an attorney who can help you file for bankruptcy and halt the process. In fact, even if you contact counsel an hour before the foreclosure sale, it doesn’t necessarily mean that nothing can be done – we have helped people in these circumstances before.

However, hiring an attorney at the last minute works directly against your interests, since it pushes off many critical matters until the last minute. Additionally, doing so only adds stress to your attorney and yourself. The truth is, while waiting to hire an attorney works on paper, it creates an incredibly difficult and, in some cases, impossible environment to adequately assess your case and make the best decisions.

Because of this, it is in your best interest to consult counsel as soon as you suspect you will not be able to make mortgage payments – even if you don’t think you’ll have any problems or an actual foreclosure on your hands. This is the only way to ensure you have adequate time to investigate and evaluate your options.

More Information

• Skilled Bankruptcy Legal Representation In Oakland, CA
• Navigating The Severity Of Foreclosure Proceedings
• 10 Reasons You Should Consider Hiring A Bankruptcy Lawyer
• Exploring Further Remedies To Foreclosure
  
• The Importance Of Expert Legal Counsel

What To Bring To The Office

Before your attorney officially starts working on your case, you will need to complete an initial case evaluation where you’ll discuss the specifics of your case and the options that may be available to you moving forward. To do this, your attorney will need copies of the foreclosure notice, (usually called the notice of default, election to sale, or notice of sale), and your most recent bank statements. If you have an appraisal, that is also helpful. From this information, we can then assess the status of the property, as well as how far behind you are in mortgage payments, taxes, and insurance.

For more information on the Financial Consequences Of Foreclosure, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (408) 295-5595 today.