Foreclosure can be described rather simply or it can be addressed in a long, complicated legal definition. But the bottom line with foreclosure is that the financial institution or company that loaned the money to buy the property takes possession of the property. The person or persons who got the loan did not make payments as required under the loan agreement and thus loses possession.

Most foreclosure situations involve a number of options for the person who is losing possession of property. Of course, they can just let the property go back to the lender, a step that will significantly affect their credit standing. This makes it much more difficult to get loans in the future.

Other options include: refinancing the loan with the same bank or other lender; negotiating additional time to come up with the payments that are owed; find another buyer who can provide enough money to satisfy the lender; get a loan from another lender or individual; file for bankruptcy.

Keep in mind that, in legal terms, there is a period of time prior to actual foreclosure during which you can negotiate with the original lender or other sources of funds. Pre-foreclosure is usually defined in specific terms, depending on the original agreement, the country and state the property is in and so on. Many laws governing real estate transactions apply across the United States, for example. This period of time can generally be three months long or even a bit more.

Foreclosure proceedings are handled through a local court, usually the circuit court of the county in which the property is located. The amount of time it takes to move your case through the court depends on how many similar cases the court is handling at the time.

Foreclosure often involves selling the property through an auction. After the court determines that the lender has the right to repossess the property the bank or other financial institution often choose to sell the property at the local auction. In doing so, the lender hopes to get a good offer that will help it recover most of the money it has invested through the loan. At this point, you have a limited amount of time to remove your possessions and leave the property.

At some point in the foreclosure process the idea of bankruptcy will probably come up, often in family discussions. But most attorneys and financial advisers will emphasize that bankruptcy should be a last resort. All methods of stopping foreclosure should be exhausted before filing for bankruptcy. Of course, this will stop the foreclosure process for a time, but it isn’t a step to be taken without serious consideration of the consequences. (That’s a subject for another time.)

Above all else, it is best to use every method you can to stop foreclosure and keep possession of your property. Obviously, this is crucial when your family relies on the property for shelter. Home foreclosure is a stressful procedure, even traumatic to some. You should try to talk with/negotiate with lenders to come up with a solution that satisfies both parties.


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Lucas Beaumont
Generalist. Wikipedia contributor. Elementary school teacher from Saskatchewan, Canada.

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